The Easter Bunny wants you to count your eggs and employees this Sunday
This Sunday, when you're running around with the kids on an easter egg hunt, take a moment to take stock of your employees. All employers (sole traders, partnerships, companies and trusts) are required on 1 April to count their employees.
Why is this date important?
20 or more employees = Single Touch Payroll starts 1 July 2018
1-19 employees = Single Touch Payroll starts 1 July 2019
(Remember that directors working in the business and drawing a wage are counted in companies and trusts; sole traders and partners of a partnership do not)
What is this Single Touch Payroll (STP)?
STP is the Commonwealth's new method of recording income earned by employees. Up until now, employees have received an annual payment summary, detailing all their income, tax withheld and a few other bits of information to help them complete their tax returns.
STP aims to make that process more instantaneous, with up to date reporting to the ATO and Government agencies. Essentially, EVERY TIME YOU PAY YOUR EMPLOYEES, you will need to report to the ATO via STP Software. The ATO is already working on Version 2 and V3 of STP, so its definitely here to stay.
While payslips will still be provided to employees, MyGov will also have the employees up to date earnings - and allow them to process their income tax return quickly and efficiently.
Why is the Government doing this?
There are a multitude of reasons both currently advised or eventually be implemented:
- doing away with payment summaries, as some employers delay releasing them or lose access to the data (e.g. a liquidation)
- making e-tax and myTax more efficient
- getting access to actual wage and tax withheld data, to ensure proper reporting on BAS
- keeping an eye on super payments for employees. Watch this space for more compliance if you're not paying super
- Centrelink and Department of Immigration and Citizenship keeping an eye on hours worked
- Fairwork being able to ensure employees are being paid the proper wage and entitlements
- correct apportionment of work related deductions (e.g. employee only worked 6 months, but claiming 100% of the year for expenses)
- Bureau of Statistics accessing employment trends
- any many many more things
What are my choices?
Doing nothing is not a choice - think of this like GST coming in on 1 July 2000: as annoying as they were, everyone was required to lodge a full BAS.
The actual choices are easy as employers have only 4 options to choose from -
1) Upgrade your existing software to Single Touch Payroll compliant version - businesses utilising QuickBooksOnline, Xero or MYOB subscriptions will be able to use their inplace upgrade service free of charge. Older versions of MYOB (AccountRight, Premier, Mac OSX etc.) will no longer be supported.
2) Change your current system to a new payroll software provider which is Single Touch Payroll compliant. There are dedicated payroll solutions if you are using a custom accounting package and only want a payroll solution (e.g. Attache, MicroPay)
3) Stay with your non-complaint payroll solution, and apply for an exemption from the ATO (e.g. rural and offline, or seasonal workers if 1 July 2018 applies)
4) Apply for a deferral in certain circumstances, such as your software provider will not be ready for STP 1 July 2018, liquidation or administration, natural disaster or circumstances outside your control. Do not rely on obtaining a deferral ACT NOW
What if I don't make a choice or change?
Just like BAS became mandatory on 1 July 2000, STP will be manadatory on the above dates. Failure to comply is a breach of employer obligations, such as super, PAYG/W, fairwork, etc. You also will not be able to report wages to the ATO, which will set your business up for an audit very quickly.
What is Jigsaw doing?
For large employers over 20 people, we need to start working now towards STP. MYOB has recently upgraded AccountRightLive to STP. Xero and QBO at this point have not. Work needs to start now, to ensure full STP compliance. You would hopefully be moving towards online EFT payments for wages, superannuation being paid electronically through SuperStream, all TFN declarations previously lodged or lodged via the internet.
For small employers 1-19, we will be hosting information nights in Sydney, Goulburn and Canberra. We would like all employers to be on an STP platform by 1 July 2018, to iron out any kinks over the next 12 months to get you STP ready. Hopefully we'll have a stressless conversion to STP 1 July 2019
- April 2018: Information nights
- May-June 2018: MYOB/QBO/Xero deployments
- June 2018: updating payroll records and test run for large employers
- July 1 2018: STP for large employers / e-payroll for small employers, allowing 12 months to implement full online payroll (SuperStream, ABA files, e-Payslips etc.)
To keep up to date, email email@example.com to register your interest or follow us on Facebook where we will be posting the information night invite.