Single Touch Payroll – Time to look under the Lid cover
Payroll is a bit like the motor of a generator, most of the time it whirrs along just fine but every now and again it coughs and splutters and because it is buried away, few individuals really know how it works.
The beginning of Single Touch Payroll (STP) gives tax managers the opportunity to take a look under the Lid-cover and gain a better understanding of how payroll works. This is essential to ensure that the business is compliant with its tax obligations and support ‘justified trust’ with the Australian Taxation Office (ATO).
STP is significantly changing payroll processes for a majority of employers, requiring accurate pay as you go (PAYG) withholding and superannuation reporting directly to the ATO when employees are paid. Given this unprecedented direct access to data, and that the directors are personally liable for underpayments, due diligence over the payroll process is timely.
Employees will be able to access details of their pay, PAYG withholding and superannuation contributions in real time. Tax File Numbers (TFN) declarations, superannuation fund choice and payment summaries will all be moved online.
What needs to be done?
Employers need to consider whether current payroll systems configurations are appropriate and what changes to systems, process and employee communications need to occur.
Tax functions should be involved with analytical reviews of payroll codes to ensure that information provided to the ATO is accurate. It would also be an appropriate time to conduct a full payroll data analytics review, so that any changes required can be implemented and tested in time for the start of STP.
When do I need to be ready?
STP will be imposed on all employers (including those in a wholly-owned group) with employees.
For more information on single tough payroll, talk to our Morshona Advisory team
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