While the thought of doing more reporting to the ATO might seem rather annoying, Single Touch Payroll – introduced by the Australian government in 2018 to encourage small businesses to be more compliant in the way they report superannuation or PAYG instalments to employees – is a good initiative in making Australian business fairer and stronger.
What is Single Touch Payroll?
Single Touch Payroll is a government initiative which streamlines business reporting obligations. When an employer pays their employees under Single Touch Payroll, the information is sent directly to the ATO at the time of the payroll.
Single Touch Payroll became compulsory for employers/businesses with a headcount of 20 or more employees on 1 July 2018. For small employers with 19 or fewer employees, it became compulsory to report through Single Touch Payroll as of 30 September 2019.
Through the ATO Single Touch Payroll system, employees can access more timely tax and superannuation information online through ATO Online services via myGov.
The benefits of Single Touch Payroll
Streamline your reporting process
Until recently, businesses had to withhold money from an employee’s salary or wages and then submit their PAYG withholding on the monthly or reporting date. With Single Touch Payroll, business owners can now submit payroll information such as salaries, allowances, deductions, PAYG and superannuation as they pay their employees.
Say goodbye to payment summaries
Single Touch Payroll means payment summaries don’t need to be sent to employees anymore, so employers don’t need to produce them. The ATO uses Single Touch Payroll reports to record any salary/wages paid, taxes collected, and superannuation contributed.
Less room for mistakes
With Single Touch Payroll the ATO can pre-fill Business Activity Statements (BAS) for employers. This reduces human error, avoids incurring penalties and having to pay someone to double-check all the numbers!
Additional benefits
Single Touch Payroll can also be used by employers to report:
- Remuneration to the director of a company.
- Return-to-work payments to an individual.
- Termination payments to employees.
- Unused leave paid.
- Parental leave pay.
- Any payments to an employee under the Seasonal Labour Mobility Program.
- Employer superannuation contributions
- Fringe benefit amounts for employees
- Payments made to contractors outside the payroll
Expert Payroll Services
Don’t let payroll admin hamper your business. You and your employees should benefit from streamlined & stress-free solutions. Call 1300 180 630 to for a no-obligation consultation or follow the link below.
Reporting required for ATO Single Touch Payroll
You are required to report on or before the date of payment to your employees. If the date of payment is not stipulated, it is the intended date of payment.
It is good habit to submit the payroll information for Single Touch Payroll when you are sending your employees their payslips if it is on or before the date of payment.
Single Touch Payroll and the Self-Employed
The ATO classifies self-employed individuals, or family members working for a family business, as Closely Held Payees. As of April 2020, small businesses with 19 or less employees do not need to report closely held payees under Single Touch Payroll until the 1st of July. Other closely held payees include shareholders of a company or beneficiaries of a trust.
Are there penalties for not reporting Single Touch Payroll?
Yes! There is a $210 fine every 28 days that a Single Touch Payroll report is overdue. This can accumulate up to a maximum value depending on the size of the business.
These are:
- $1,050 for small businesses
- $2,100 for medium businesses
- $5,250 for large businesses
- $525,000 for significant global entities
ATO Single Touch Payroll – Phase 2
The ATO’s Single Touch Payroll Phase 2 came into effect at the beginning of January 2022 and requires employers who need to report information about their employees to multiple government agencies to report additional information to the ATO such as:
- Employment basis
- Paid leave
- Allowances
- Overtime
- Cessation details
- Child support deductions
- Salary sacrifice
- Lump sums
- Country codes.
Employers will also need to separately itemise the components which make up the gross amount – including bonuses, directors fees, paid leave, salary sacrifice, overtime and allowances.
Single Touch Payroll and accounting software
When it comes to Single Touch Payroll we love accounting software like Xero & Myob. Why do we like them so much? Basically, they really make reporting Single Touch Payroll to the ATO a piece of cake. With pretty much a touch of a button, employers can report employees’ wages and more using Xero or Myob payroll software.
Not only can Xero & Myob generate and send reports showing employee PAYG withholdings and superannuation liabilities, but it can also do so much more – such as:
- Collating pay, PAYG and super details at every pay run.
- Submit reports directly to the ATO in a few simple clicks
- Allow business owners to view the status of reports – overdue, pending etc.
Our experienced team are familiar with both systems and can help you determine the best option for your business, as well as help you set up, manage and learn how to use this software effectively.
Get Professional Single Touch Payroll Support
Meeting all your business’ reporting obligations can be a time-consuming process that stops you from managing and growing your business, quickly. Let the experienced team at POP Business help. Find out more today, call 1300 180 630 or follow the link below to get started.
Expert Payroll Services
Don’t let payroll admin hamper your business. You and your employees should benefit from streamlined & stress-free solutions. Call 1300 180 630 to for a no-obligation consultation or follow the link below.
