John Shepherd, Assistant Commissioner, Australian Taxation Office delves into some of the finer detail ahead of the 1 July move to Single Touch Payroll (STP), a change to the way larger employers report tax and super to the ATO.
The 1 July start for Single Touch Payroll (STP) is fast approaching, and all larger employers, that is, those with 20 or more employees, will need to get ready.
Some of the basics steps to prepare for the transition can be found here, however, we’d like to offer a few clarifications and reminders to help you get ready.
Employee headcount – what is required
There have been some questions about the employee headcount we’re asking employers to do if you’re not sure you meet the 20-plus employee mark.
While we’ve nominated 1 April as the date for deciding employee numbers for STP, (don’t worry – we know it’s Easter Sunday), you can conduct the headcount any time after. If you have 20 or more employees on your payroll on 1 April 2018, you will need to report through STP. You do not need to report the results of your headcount to the ATO.
Who qualifies as an employee on 1 April
It’s important to know exactly who does and does not count as an “employee” for STP purposes.
You do need to include the following employees in your headcount:
- full-time employees
- part-time employees
- casual and seasonal employees who are on your payroll on 1 April and worked any time during March. However, you may be eligible for an exemption for STP reporting from 1 July 2018 if the reason you have 20 or more employees is because you have employed seasonal workers for a short-time only.
- employees based overseas
- any employee absent or on leave (paid or unpaid).
You do not need to include any employees who ceased work before 1 April, casual employees who did not work in March, independent contractors, staff provided by a third party labour hire organisation, company directors, office holders or religious practitioners.
What to do if your payroll software provider won’t be ready by 1 July
If you need to start reporting through STP, the first thing you should do is to check in with your current payroll software provider. Your provider can let you know what you need to do to make the transition. For example, this may involve updating your existing software or finding an STP-enabled product.
We know the 22 largest payroll providers represent about 80% of employers with 20 or more employees, and we expect the majority to have STP-compliant software solutions market ready by 1 July.
However, some providers may not be STP-ready from 1 July and have asked us for more time to finalise their STP solutions. In some cases, we’ve issued them with a “deferred start date”.
Generally speaking, if you’re an existing customer using a product undergoing an STP update and that product has a deferral, it will apply to you. It’s important to understand that such deferrals apply only to specific products. They do not apply to all the products under one provider.
If your provider tells you they will not be STP-ready on 1 July, to be certain of your status, you should ask if they have a “deferred start date” for your particular payroll software product from the ATO. If they do, you should also ask them to confirm that this deferral will apply to you.
If your payroll software provider says they are not developing an STP-ready product, you will need to find a new provider that is either STP-ready now, or will be by 1 July.
What to do if you don’t use payroll software
We understand that not everyone uses payroll software. Many BAS or tax agents and payroll service providers will be able to report through STP on their clients’ behalf. If you currently use an agent or service provider, ask if they will be able to report through STP for you.
If they say they can’t, you have the option of either finding a new agent or service provider who can, or adopting a software solution that will enable you to report through STP from 1 July.
The move to STP is a significant one, involving more than 70,000 larger employers. While we are firm on the start date, the ATO has committed to a “transitional year” of supporting both software providers and employers. In most cases, we won’t be enforcing penalties around STP. Our major focus is helping you make the transition as smooth as possible.
For larger employers, our main message is this: The ATO is up and ready to go with STP on 1 July, so it’s best to get ready now. You can find out more, and download our STP checklist and fact sheet on our website – ato.gov.au/stp
