Australia Introduces Single Touch Payroll
The Australian government introduces a real-time reporting system to streamline the reporting of tax and superannuation by employers. The government initiated the process when it passed the Budget Savings – Omnibus Bill – September 2016. Under the proposed legislation, a new electronic reporting framework will be incorporated to simplify the existing structure by introducing “Single Touch Payroll” (STP).
Currently, companies follow a manual reporting process or Pay As You Go (PAYG) withholding to the Australian Tax Office (ATO). The new STP will automate information sharing with the ATO through Standard Business Reporting (SBR) software. The employers will also have an option to pay their PAYG withholding to ATO at the same time they pay their employees.
Timeline for Implementing the STP
- Employers with 20 or more employees, will be required to report to ATO through the Single Touch Payroll from July 1, 2018. However, they can voluntarily report through STP from July 1, 2017
- Employers that have 19 or fewer employees, will be able to report through STP from July 1, 2017. However, it is not mandatory.
- Employers with 20 or more employees that report through Tax and Business Activity Statement (BAS) agents, still need to report through STP from July 1, 2018, for their clients.
- STP reporting will be available from July 1, 2017, for a limited number of small businesses during the pilot process with an option of voluntary payments.
The government will provide assistance to companies to overcome challenges during the transition. The minister for small business and assistant treasurer, the Hon. Kelly O’Dwyer said that Government will be providing a $100 non-refundable tax offset for SBR-enabled software to companies with less than $2 million turnover. This offset will apply from July 1, 2017, and will be available for software purchases made during the 2017-18 financial year. ATO has been working with various software developers, digital service providers, and tax practitioners for a smooth transition. The objective is to support companies that need to integrate STP into their existing payroll system.
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