What is Single Touch Payroll?
Single Touch Payroll is a reporting change for employers. Employers will need to report payments such as salaries, wages, pay as you go (PAYG) withholding and superannuation information directly from their payroll every time they pay their employees.
When does Single Touch Payroll Commence?
Employers will need to count the employees on their payroll for each entity they have as of 1 April 2018.
For employers with 20 or more employees, Single Touch Payroll commences from 1 July 2018.
For employers with 19 or fewer employees, Single Touch Payroll will be expanded to include all remaining businesses from 1 July 2019. This is subject to legislation being passed in parliament. Employers with fewer than 19 employees can still report voluntarily, although this is not a requirement.
How to complete a headcount
Businesses who need to undertake a headcount includes, companies, trusts, partnerships, sole traders and not-for-profit organisations. The headcount is for each individual entity. The headcount is based on the number of employees on the payroll on 1 April 2018 and not the full-time equivalent.
The headcount includes:
- full-time employees
- part-time employees
- casual employees
- employees based overseas
- any employee who is absent or on leave (paid or unpaid)
- any employee on maternity leave (paid or unpaid)
- seasonable employees
Who is excluded from the headcount?
- independent contractors
- staff provided by a labor hire organisation
- company directors
- office holders
- religious practitioners
- any employees who ceased work prior to 1 April 2018
- casual employees who did not work in March 2018
The definition of an employee is the common law definition of an employee, hence, any contractors or other staff who meet the common law definition of an employee should be included in the headcount.
If a business starts to report and dropped under the 20 employees, they must still continue to report.
You do not need to report the headcount to the Australian Taxation Office. The assessment is a self-assessment. It is best to keep a record of your headcount as of the 1st of April 2018.
How to get ready for Single Touch Payroll
Many employers will be able to update their existing payroll software to a version which is Single Touch Payroll ready. Employers with 20 or more employees who do not use payroll software will need to choose a product that offers Single Touch Payroll by 1 July 2018 for those with 20 or more employees.
The Australian Taxation Office has stated that all employees who need to report, should start reporting from their first pay run after the 1st July 2018.
Some software providers have been given a deferral which will cover them. We recommend contacting your software provider to check when their product will be updated and if they have a deferral in place. Further information about Xero, MYOB and Quickbooks can be found on their websites.
What do I need to do?
- Do a headcount of your employees on 1 April 2018 to work out if you have 20 or more employees.
- If you have software: talk to your provider to find out how and when your product will be ready
- If you don’t have software: choose a product that offers Single Touch Payroll.
- Update your payroll software when it’s ready
- Start reporting to the ATO through Single Touch Payroll from the 1st pay run after the 1st July 2018.