There’s a good chance you have heard the term Single Touch Payroll in passing over the last few months and years thanks to the federal government making some big changes to the regulations. Single Touch Payroll (STP) is a software-based reporting process for providing information to the Australian Taxation Office (ATO) regarding payroll.

Payroll information you report will include things like your employees' salaries and wages, allowances, deductions and other payments, all Pay As You Go (“PAYG”) withholding on behalf of the ATO as well as superannuation information. However, this does not include payments to any independent contractors or labour hire staff members, only employees.

Updated regulations now mean that you as a business must provide your employees’ payroll data to the ATO typically on or before each pay day. Single Touch Payroll does not change your pay cycle or payment dates for any of your obligations as an employer, only the way the information is reported to the ATO. The changes being implemented can be significant for already established businesses.

Generally, once you begin using STP, you will not be required to provide your employees with an annual payment summary. You will only be required to produce a payment summary for reportable payments excluded from STP such as compensation payments, employee share schemes and so on.

As was the case with the old system, there is a need to prepare some documentation for the ATO on an annual basis, however this process has been simplified. You will now need to prepare a "finalisation declaration" by July 14 each year. The information you report through Single Touch Payroll will not be tax-ready for your employees or their tax agents until you make this declaration.

Your employees will be able to view their year-to-date payment information via the ATO’s online services portal, accessed via MyGov. If an employee does not have a MyGov account, they can engage with the ATO directly to request one be sent to them.

STP is currently only mandatory for employers with 20 or more employees for FY2019. However, all businesses, even those with 19 or fewer employees, will now need to adopt STP systems by July 1, 2019. Rule of thumb for small business owners – ensure you have STP implemented by July 1, 2019.

An additional complication, only some software platforms have been verified for STP management. It’s important you have the right software implemented for your business so remember to ask your software provider or accountant which system is best for your business.

Single Touch Payroll is a truly major shift for Australian small businesses so it is important to find out what you need to do and what you need to update in order to remain or become compliant. I recommend you engage a professional to support you through this big change.

If you would like more information on this topic or have another tax question, email tax.albury@crowehorwath.com.au.

Any information in this article has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material. While reasonable care is taken in the preparation of this information to the extent allowed by legislation, Crowe Horwath (Aust) Pty Ltd ABN 84 006 466 351, accepts no liability whatsoever for reliance on it.