Single Touch Payroll (STP) will apply to organisations with 20 or more employees (Substantial Employers), from 1 July 2018. Employers with 19 or fewer employees will have the option of adopting STP.
However, STP-ready employers will be able to choose to adopt STP reporting earlier than 1 July 2018.
Mandatory STP Reporting
You will need to determine whether your organisation is a Substantial Employer on 1 April 2018. If so, it will need to undertake STP reporting to the ATO from 1 July 2018.
If your organisation is not a Substantial Employer on 1 April 2018, it will need to test its status on 1 April in ensuing years to determine whether the threshold is met and it needs to undertake STP reporting from the immediately following 1 July. Once your organisation becomes a Substantial Employer, it will remain one notwithstanding it ceases to meet the 20 employee threshold.
The 20 employee threshold is based on employee head count and not on full time equivalent employees. Guidance is available on who is (and who is not) included in the head count – see ‘Definition of employee’ under the ‘Single Touch Payroll timeline’ heading.
Updated Information on STP
The ATO has recently published a time line that sets out, in more detail, the steps that the ATO proposes to take over the next 12 months in the lead up to STP application. In particular, employers who have 20 or more employees in September 2017 can expect advance contact from the ATO at that time. It has also published an employer checklist to help in their preparation.
Note the ATO’s comment:
‘The obligation to report superannuation payment information to the ATO is currently being reconsidered. We will provide more information about this when it becomes available.’
Substantial Employers will need payroll software that has the ability to undertake STP reporting or will need to use a payroll service provider with this capability. The ATO observes that it expects the staggered release of updated payroll software with STP capability to commence in October 2017.
Employers should liaise with their software providers in a timely way, so that they in a position to comply with the 1 July 2018 deadline. However, note that:
‘You will be able to see which payroll solutions are Single Touch Payroll-enabled on the product catalogue available on the Australian Business Software Industry Association (ABSIA) website. Over time, this catalogue will be updated with payroll solutions that are Single Touch Payroll-enabled.’
Update – Employees and STP
Whilst development of the employer-STP interface is progressing, developments are also occurring in relation to the proposed employee online experience with STP. The current focus of attention is the online approach to new employee TFN declarations and superannuation choice options, while recognising the need for ongoing ability to update employee information (e.g. change super funds during the course of employment).
This has implications for employers.
The online interface could occur through the employee completing a TFN declaration and choice of super fund election via MyGov or via (one would expect for larger employers) the employer’s software:
‘The Government announced in December 2015 that Single Touch Payroll would include an option for individuals commencing employment to complete their Tax File Number (TFN) declaration and superannuation standard choice forms using ATO Online or through their employer’s business management software.’
Employee inter-face through MyGov
A recent ATO consultation paper identified informational needs which an employer is likely to have to meet in order to equip an employee with the ability to complete the TFN/super fund election online through MyGov.
It especially noted the limitations on pre-populating the MyGov interface with default super fund information and the associated need for employers to provide new employees with a ‘Welcome Pack’ (see the consultation paper at p. 5: employer’s ABN, default super fund details etc.) that enables the employee to complete the documentation in MyGov. The ATO consultation paper notes (p. 6) that MyGov is expected to accommodate choice of a self-managed superannuation fund from some (as yet to be determined) time in 2018/19.
Relevant data supplied through the MyGov interface is transmitted to the employer’s business management system (BMS) – see generally the informative diagram in Attachment A to the consultation paper. The paper suggests that the Welcome Pack could be provided to the employee by email.
In relation to TaxEd’s enquiry regarding standards for employer proprietary BMS software, the ATO advised:
‘There are BMS requirements for employers who wish to utilise the employee commencement service through myGov, which involves periodic polling for on-boarding messages through SBR. This is a mandatory requirement as the Commissioner is obligated to provide the employer with TFN declarations completed through myGov. We are currently working on a registration and EOI process for employers who wish to be part of our September 2017 release and more information on requirements will be provided in our upcoming communications.’
Employee interface through Employer’s BMS
Employer software through which the new employee is provided with the requisite information and through which the employee provides the BMS of the employer with the TFN and super fund choice data for upload to the ATO may be time-saving option for large organisations or those with high staff turnover. This is also illustrated in the diagram in Attachment A to the consultation paper.
The paper was directed to the form of the MyGov interface, although noting that the research and proposed action will be relevant to employer software. Organisations contemplating developing employer-specific software will be especially interested in the draft online form set out in Attachment B to the consultation paper, the draft design principles identified in the paper and the discussion relating to their application. Such organisations should monitor the outcome of the consultation process.
While one would anticipate that generic BMS software providers will develop an STP employee interface, employers using such software may like to confirm this (and the timetable for delivery) as part of their preparation to move to STP.
Any questions relating to the STP/consultation paper can be sent to the ATO’s STP Mailbox.
Conclusion
Preparing for STP is not only limited to ensuring your organisation will be able to provide the requisite STP data to the ATO through access to appropriate software. It will entail ensuring there is a system/procedure (whether online/electronic or paper based) to enable the employee to provide his/her personal information.
Postscript – relationship between STP and MyGov interface
As a postscript, we understand that even if an employer does not participate in STP, the employer will be able to participate in the MyGov process. In order for such employers to offer their employees the option of communicating TFN declarations and superannuation fund choice through MyGov, the employer will need a BMS system that allows the timely periodic acceptance of MyGov data, as broadly described in the ATO’s response reproduced under subheading ‘Employee inter-face through MyGov’ above. Similarly, participation in STP is not a pre-requisite to conducting a BMS for upload of TFN and super fund data to the ATO.
Equally importantly, STP employers are not obliged to have software capacity to receive data from MyGov. However, one might anticipate that STP enabled software will include this capability. Nevertheless, timely consultation with software suppliers on this further capability of their product seems prudent as part of any planning process.
This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.