Legislation to enact Single Touch Payroll has been introduced to the Parliament, contained in the Budget Savings (Omnibus) Bill 2016.
Update: the Budget Savings (Omnibus) Bill 2016 has passed the Parliament.
Single Touch Payroll (STP) is a system for the automatic electronic reporting of superannuation and payroll information to the ATO from business payroll software.
“STP reporting is designed to reduce the compliance costs for employers meeting their Pay as you go (PAYG) withholding obligations by using Standard Business Reporting (SBR) enabled software to automatically report employee salary or wage information to the Commissioner at the time these amounts are paid,” says the Explanatory Memorandum (EM) to the Bill.
This is estimated to save $55 million in regulatory compliance costs annually. “Entities that report under STP will not have to comply with a number of existing reporting obligations under the taxation laws.”
If passed as currently drafted, employers with 20 or more employees would be required to comply with the Single Touch Payroll reporting requirements from 1 July 2018.
“There is no Government decision at this stage to extend the regime on a mandatory basis to smaller employers,” says the EM. However it does note that the ATO will be conducting a “pilot” in the first half of 2017 to demonstrate the deregulation benefits to small businesses. Employers with less than 20 employees will be able to voluntarily use Single Touch Payroll.
The EM also says that Single Touch Payroll will give the ATO “employee-level” superannuation contribution data in a more “timely and visible manner”.
“This will improve the ATO’s ability to monitor the payment of employee entitlements and enable the ATO to implement early intervention processes if superannuation guarantee (SG) contributions are not being paid.”
Single Touch Payroll will also allow employers to give employees the option to complete TFN Declarations and superannuation Standard Choice Forms through My Gov instead of on paper.
In December 2015 the then Minister for Small Business and Assistant Treasurer, and current Minister for Revenue, Kelly O’Dwyer announced that some businesses would receive a tax offset to help pay for Standard Business Reporting (SBR) software.
“To assist with the transition the Government will provide businesses, with a turnover of less than $2 million, a $100 non-refundable tax offset for SBR enabled software,” Minister O’Dwyer said. However this tax offset doesn’t appear in the Bill, Treasury has been asked to clarify if it remains Government policy.
Single Touch Payroll was first announced in December 2014, and had since been subject to delays, changes of Minister and the announcement of further consultation. Single Touch Payroll was originally meant to commence from 1 July 2016, however this was pushed back.
Update: The ATO has released a discussion paper on the implementation of Single Touch Payroll.