The introduction of Single Touch Payroll in 2018 was one that has sent ripples through businesses of all sizes and industries, uniform only in their compliance requirements. If you have rolled out the changes or are in the process of implementation, you may be wondering just what impact this will have on your business and the wider Australian network. Let’s uncover what Single Touch Payroll is, and what it means for Australian businesses like yours.
What is Single Touch Payroll?
Single Touch Payroll is the new Australian standard of payroll reporting and compliance. It is designed to allow employees to have absolute access to their tax and super contributions, without having to wait for the end of a financial year. This means that all employers are required to report on salaries, wages, pay as you go (PAYG) withholding and super information, every time you pay your employees. Businesses with 20 employees or more were required to have made the change to Single Touch Payroll by July 201
What does this mean for existing payroll processes?
Single Touch Payroll is available across most payroll, accounting and business management software. If your business already uses an established payroll system, then chances are there is a simple upgrade to include Single Touch Payroll compliance. For businesses without a payroll software, they will have to invest in a solution that will facilitate the reporting requirements. Appreciating that software upgrades are not a luxury that all businesses can enjoy or afford, the ATO has compiled a list of no-cost and low cost Single Touch Payroll solutions.
What does this mean for family-run businesses?
Many family-run businesses will have ‘closely held payees.’ This means employees that are directly related to the business entity from which they receive an income or payments. Not only family members qualify as a closely held payees, but directors, shareholders, trustees or beneficiaries of a trust. It’s often the case that closely held payees are not paid with the same regularity as other employees earning a wage, and so Single Touch Payroll reporting is flexible in this instance.
What happens to the payment summary?
Single Touch Payroll has now deemed the payment summary obsolete, with employees having real-time access to their payment history through myGov. If your employer has not yet migrated to Single Touch Payroll, then you may receive a payment summary in the 2018-2019 financial year. If you haven’t spent much time on myGov, log in to see your income statement and payment summary, and get familiar with the system that will be the future of tax and income in Australia.
What are the next steps?
Now that you are aware of the changes that have or need to be changed, you can look to set your business up for future success. If you have a modern payroll system currently, you will simply need to continue using the system to report, with little more than an upgrade. For other businesses, an overhaul may be required and a new payroll software system found. Select one that makes sense for the size and nature of your unique business, and compare different providers before you make a choice. If Single Touch Payroll is a change that you would rather not be pulled into, you can always outsource your payroll to a third-party provider to ensure seamless and compliant payroll.
Single Touch Payroll is not an unnecessary change that was created for the sake of it. It has been designed to enhance the payroll process for employees and employers, reducing EOFY drama and promoting greater transparency for all. Before you are pulled in any one direction, weigh up your options and providers so that you make the right choice for your business.