From 1 July 2018, businesses that employ more than 20 people will be required to align with the Australian Tax Office’s (ATO’s) Single Touch Payroll Reporting (STPR) requirements. The change means the ATO will be collecting payroll data in real time. As an employee receives a payslip, that information, including tax and superannuation payments, will also be electronically transmitted to the ATO at the same time.
It’s a change that will have particular implications for the way most dealerships manage their payroll requirements. The threshold for mandatory participation includes businesses with 20 employees of any sort, not just full-time staff, so with a dealership being a people-intensive business there will be very few that won’t have a STPR requirement come 1 July 2018. Thankfully the change is something Dealers can start to prepare for now, starting with a review of their current payroll system and processes.
Why this change is so important
The move to STPR sets a new standard for payroll reporting in Australia. Most dealerships will be used to providing some high level payroll data (e.g. PAYGW) on a periodic basis, but now the ATO will have access to detailed real-time transactional data. This then means ATO compliance activities will be completed in real time, which we think will begin to change the way they engage with taxpayers when issues do arise.
The change could also affect the way this information is shared between other agencies, as it aligns with the ATO’s current information sharing agreement. This means, for example, the ATO will potentially be able to share real-time payroll data with agencies like Office of State Revenue and Centrelink, instead of continuing to do it a year after the fact.
Superannuation payments will also be affected by the new STPR system. For the first time, the ATO is going to be able to match an employee’s payment to a superannuation fund to an actual real-time payslip rather than waiting for an annual report from an employer, with no guarantee the money has actually made it to the individual superannuation account.
What are the next steps?
Our advice is to review your current internal processes now to ensure you are ready come 1 July 2018. Consultation with your payroll software provider will be an important part of the review to confirm they have the capability to interface with the ATO’s systems. Equally important will be the consultation with your accountant and business advisors to ensure your current business practices are compliant with the various federal and state taxes that will be under the spotlight like never before.
It is anticipated the ATO will start reviewing real time data from 1 July 2018, so those businesses that have planned early will be well placed to avoid any unwanted attention from the ATO.