Payroll Reporting to the ATO is mandatory from 1 July 2018 - Are you ready?

Single Touch Payroll (STP) is a new system designed to align reporting obligations to the Australian Taxation Office (ATO) with employers' payroll processes.  This system is mandatory for most employers from 1 July 2018. 

Under the STP system, employers will have to report payments to the ATO including salaries and wages, PAYG withholding and superannuation information at the time that employees are paid.  Employers will not need to provide a payment summary at the end of the financial year under this system, as the ATO will make all of the required information available to employees through the Australian government’s online myGov system.

What must employers do?

Employers must count employees on the company’s payroll as at 1 April 2018 and if there are 20 or more employees, must report using STP from 1 July 2018.  If there are fewer than 20 employees, employers have until 1 July 2019 to report using STP.

Employers should speak to their payroll software providers to determine how the new system will be incorporated into their existing software and if the software provider will be ready by 1 July 2018 or if it has been approved by the ATO for a deferred start date.

If there are extenuating circumstances and an employer requires a deferred start date, employers must apply to the ATO before their mandatory start date.

Lavan comment

The introduction of the new STP system provides an opportunity for employers to review their business and payroll processes and determine whether:

  • employees are being paid correctly;
  • superannuation entitlements are being correctly calculated;
  • any overpayments are being correctly addressed; and
  • employee information such as names, addresses, and dates of birth are all accurate. 

Penalties for reporting errors or mistakes will generally not apply for the first year and the ATO will support employers through the transition, so it is recommended that employers start reporting as soon as possible to become familiar with the new system.

If you have any questions about your business and payroll processes or your obligations under the new STP system, please contact Lavan’s Employment and Safety team.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.