Businesses used to report this information to the Australian Taxation Office (“ATO”) once a year. Now, they need to send a report after each pay day. And those reports must be submitted digitally, using a very specific format.

Changes to when you report payroll

Small businesses used to finalise their payroll records at the end of the financial year and produce:

• a payment summary annual report for the ATO, stating how much the business had paid in salary or wages, the PAYG withheld, and some superannuation contributions they’d made; and or
• a payment summary for each employee, stating what each employee received in wages or salary, the payroll taxes collected from their pay, and some superannuation contributions made on their behalf.

With STP, the payment summary annual report and the payment summary will go away.

No more payment summary annual reports

Because you’ll be updating the ATO on a pay-by-pay basis, you won’t need to prepare a payment summary annual report anymore. You’ll just let the ATO know when you’ve made your last pay run of the financial year for your employees.

No more employee payment summaries

Payment summaries won’t need to be sent to employees anymore, so employers won’t be required to produce them. The ATO will use single touch payroll reports as the sole record of salary/wages paid, taxes collected, and superannuation contributed.

Your employees will be able to see the information that would normally be on their payment summary by logging on to myGov.

You’ll need to report payroll online

There’ll be no more paper forms for reporting your payroll activity to the ATO. You’ll need to submit the information online, using a specific format known as SBR (Standard Business Reporting). Depending on how you do payroll now, you may need to change software or find a service provider who can produce compliant reports for you.

Your options for switching to single touch payroll

To be ready for the switch, you’ll need to make sure you can submit compliant reports every payday. Here’s what it means:

• If you use online payroll software, it should be able to handle the job. Just make sure it produces ATO-compliant reports.
• If you use desktop payroll software, you’ll need to find a service that can upload your payroll reports, convert them into the ATO’s required format and submit them on your behalf.
• If you use spreadsheets or pen and paper, you’ll need to find a service to convert the data into a compliant digital report format and submit it on your behalf.

Single touch payroll software

The new regulations may require you to find a new service provider or move to online payroll software. While that could be a pain initially, there are upsides. Automation or outsourcing will make compliance less of a time burden for your business.

What does this mean?

We have undertaken a review of a practice where they have been heavily reliant upon a proprietary software package, the implication of this will be that they are going to need to switch to another provider, as the cost of amendment is going to be significant.

The team has been working closely in the implementation process and the impact for businesses. Contact us on 1300 023 782.