The new Single Touch Payroll (STP) reporting changes being introduced in Australia are fast approaching on July 1, 2018, so now is the time to review if your business is ready so it can comply with the new requirements and not be caught short.
STP will be compulsory for all employers in Australia with 20 or more employees. This requires employers to report salaries and wages, PAYG withholding information and superannuation information directly to the Australian Taxation Office (ATO) as part of each payroll cycle, using STP enabled payroll software or utilising a third party to send STP formatted information on their behalf. Reporting each payroll cycle will remove the need for the annual end of year reporting process and provide the ATO with more immediate access to payroll data. This allows any mistakes to be picked up and sorted out sooner, and allow policy to be based on real-time information.
Payroll can be a complex beast given the many different scenarios that we know can occur. From the different tax treatments for salary and wage earners at different earnings thresholds, hiring and terminating, changes and corrections, it seems that the number of situations that STP must cover is ever expanding. We’re engaging with the ATO and the wider payroll software industry so we can be confident these factors can be addressed before July 1.
How can you get ready?
If you’re an employer of greater than 20 employees, we suggest you talk to your payroll provider to check that they will be ready in time for the July deadline.
Ask how they are planning to meet the STP requirements, and specifically, how they are planning to interact with the ATO. There are two possible ways to do this:
- Your payroll software provider will interact directly with the ATO
- Your payroll software provider will use a third party (known as a Sending Service Provider)
If your payroll software provider is using a third party, ask how security and privacy of your data will be assured. Australian tax officials are concerned about the protection of data, given that the more points in the chain there are between employers and the taxation office, the higher the risk of data being intercepted or manipulated. If you’re not satisfied with the response from your provider, seek another option.
Will STP cost more?
The answer to this is: it depends.
For STP files to be sent to the ATO, files need to be in a particular format. The cost may depend on how your files are converted.
There are three ways to ensure your information is in the right format:
- Your payroll software provider can use a third party to convert to the ATO format
- Your payroll software provider can build their own platform to convert the files
- Your payroll software provider can purchase a converter from a third party
The costs involved in using a third party, building or purchasing a solution will determine the final cost to employers, so this is another thing you should check with your provider.
What’s Datacom doing to be ready for STP?
Datacom is carefully monitoring all the ATO information about STP, and we’re confident we’ll be ready for July 1.
To ensure the security of all our customers’ data, we’ll interact directly with the ATO, which means we won’t be sending data through any intermediate points. In terms of converting the data to the ATO’s required format, we will license software from a well-established specialist provider with a great track record in this area. This software is being integrated with our own software, DataPay. Buying a ready-made, tried and tested solution means we can pass that peace of mind on to our customers.