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Single Touch Payroll update

What is Single Touch Payroll?

Single touch payroll is a new way for employers to report their PAYG and super contribution information to the ATO after every pay run. Previously reporting was done either monthly or quarterly and super contributions were not reported. According to the ATO, Single Touch Payroll information will be used to prefill your activity statement in the future.

When will Single Touch Payroll come into effect?

For employers with 20 or more employees, single touch reporting will be mandatory from July 1 2018. For employers with 19 or less employees, it is expected that single touch reporting will be mandatory from July 1 2019. It’s important to note that you need to do a “headcount” on April 1 2018 to determine if you have 20 or more employees.

Even if you drop under 20 employees by July 1, you may still be considered a substantial employer and be required to use STP reporting, so it’s important that you perform a headcount in April.

What is a substantial employer?

A substantial employer is an employer with 20 or more employees on their payroll on 1 April 2018.

How will this affect my payroll?

From a data processing point of view, nothing should change in how you process payroll using your accounting software. However, after each pay run your payroll software will need to send some additional reporting information to the ATO. If your software provider doesn’t support single touch payroll and your business employs 20 or more employees, we recommend that to look for another provider.

Is the headcount based on full-time equivalent?

No – the headcount is based on the number of employees on the payroll on 1 April 2018, not the full-time equivalent.

Who is included in the headcount?

bulletFull-time employees
bulletpart-time employees
bulletcasual employees who are on the payroll on 1 April 2018 and worked any time during March 2018
bulletemployees based overseas
bulletany employee who is absent or on leave (paid or unpaid) and
bulletseasonal employees.

Who is NOT included in the headcount?

bulletAny employees who ceased work before 1 April 2018
bulletcasual employees who did not work in March 2018
bulletindependent contractors
bulletstaff provided by a third-party labour hire organisation
bulletcompany directors (however if you are reporting under STP, then any remuneration to directors via payroll will need to be reported)
bulletoffice holders and
bulletreligious practitioners.

How does the headcount work for a company group?

If an employer is part of a company group, the total number of employees employed by all member companies of the wholly-owned group must be included.
(Note: there are no other grouping rules, so a trust or partnership — or a partly-owned company — cannot be grouped with other entities for this purpose.)