Single Touch Payroll
It sounds good – one touch and your payroll is done? Not quite. This is the name given by the ATO to their new payroll reporting system.
Does Single Touch Payroll Apply to Your Business?
Single Touch Payroll legislation received Royal Assent in September 2016, it comes into effect 1st July 2018
At as 1 April 2018 every employer will need to perform a headcount of people employed at that time (not just those at work, but number of employees – employees on Annual Leave or Personal Leave, or is not at work for any reason, is still counted). Any business with 20 or more employees on that date will be affected by the Single Touch Payroll legislation. At this time only “substantial” employers are being affected, however, this may change in the future. Smaller employers can elect to join the Single Touch Payroll, but this is voluntary. The ATO is conducting further research before it is considers making it mandatory for all employers.
What is Single Touch Payroll
The Current System
Under the current system employers run their payroll each Week/Fortnight/Moth (Pay Event). Monthly or quarterly, depending on the size of the payroll this is reported to the ATO on the IAS/BAS. At the end of the financial year employers provide their employees with Payment Summaries and provide the ATO with an Annual Summary. This is then matched to the IAS/BAS issued each period.
Single Touch Payroll
Single Touch Payroll only affects the reporting and not the payment of the PAYGW. Data is submitted to the ATO each Pay Event via the employers’ accounting system. For example, if employees are paid weekly each pay is a pay event and reported to the ATO weekly.
The Data submitted is the Gross Wages for the year to date and the PAYG Withheld to date and the amount of the Superannuation Guarantee Contributions accrued. Because you only report the year to date figures it is a self-correcting system. This means any errors found after submission will be corrected in the next submission – amended reports are not required.
Why are the ATO introducing this system
For the ATO
- it gives greater visibility of employers.
- Payment Summaries will not need to be issued to employees;
- Employers will need to advise the ATO of “Finalisation” of the payroll year. EMPDUPE files will no longer be required, however the ATO must be advised of finalisation by the 14th July each year;
- RESC and RFBA reporting will be completed as part of the “Finalisation” process;
- BAS/IAS will be prefilled by the ATO using the data provided (this can be over-written);
- Employees’ tax returns will be prefilled with payroll information;
- Payroll information will be available to employees throughout the year via myGov;
- The ATO receives a copy of the data submitted through the SuperStream system.
As part of this payroll overhaul the ATO are also looking at streamlining the on-boarding process for new employees by automating TFN Declarations and Super Choice forms in the payroll software and myGov.
Thanks to ICB for the summarised information.
Further information can be found here.