It’s been talked about for some time, but now that it’s here, STP transition should not be taken lightly, writes Jo Pratt of ADP
From 1 July 2018, businesses with 20-plus employees (as at 1 April 2018) must submit Single Touch Payroll (STP) data to the ATO. The reality of this new era of near real-time transparency is bound to result in some changes to business processes.
Remember, your employees will be able to watch their online income statement progressively update via MyGov as a result of the data you are lodging.
The STP reporting highway
STP data needs to be lodged on or before the day you pay your people. Each time you lodge data, the ATO will validate this data and may send errors back to you to be fixed. If you’re processing any combination of weekly, fortnightly and monthly payrolls, this quickly adds up to a data highway of back-and-forth reporting to the ATO.
But it’s just payroll data, right? Well, yes, and it could require up to 83 different fields to be reported for each employee, every time you process. Let’s see how much data that could equate to if you’re running a fortnightly payroll for 200 employees and a monthly payroll for 100 employees.
Payroll visibility via STP = Pay processes x employees x 83 fields So in our example this equates to: ((24x200) + (12x100)) x 83 = 498,000 fields (per annum)
The ATO will be able to analyse and share (with other government agencies) what you’re paying your people and ascertain whether you are meeting your employer obligations. Now, are you beginning to think about the potential for going back and forth clarifying data with the ATO?
Errors could be attributed to but are not limited to:
- failure to adhere to the ATO file specification and formatting requirements
- not knowing when to report null payments
- invalid tax file numbers
- invalid ISO country codes on addresses
- failure to categorise payments under the specified STP categories
- invalid ABN numbers
- failure to send the correct ‘type’ of STP lodgement, eg Original Submission, Full File Replacement, Update Event
Be aware of business changes impacting STP reporting
Each lodgement includes a globally unique BMS ID that identifies the payroll service provider for each combination of Employer ABN and PAYGW Branch.
On MyGov your employee will see their payments made under each BMS ID and Employee ID combination.
Any change you make to the ABN or Employee ID may require the year-to-date data lodged so far to be transferred to a new ABN or Employee ID identifier, to avoid duplication of data in MyGov.
Suffice to say, you’ll want to be working with an expert to help guide you through these situations.
Multiple versions of STP Payroll Event Service
The ATO supports multiple versions of the STP Payroll Event Service. The latest version, PAYEVNT.0003 2018, has improved functionality, including shorter response time frames and partial file rejection for employees who fail validation. This means that valid employee data is accepted by the ATO and not delayed by employee data that has failed validation.
The Australian Business Software Industry Association lists who is on which version (www.absia.asn.au). The ADP STP lodgement service is developed to the latest version to take advantage of the benefits mentioned above.
When you authorise an STP lodgement you are making a legally binding declaration that the data being lodged is complete and correct. It would be wise to partner with a payroll provider that understands Single Touch Payroll and can guide you through the process, helping you to understand and correct errors in time.
Also, be aware that if your payroll provider is calculating and preparing your payroll for a fee, they must be a registered agent (tax or BAS agent). ADP is a registered agent and has the capability to lodge on your behalf using our registered agent number.
I hope these insights into STP give you some new points to consider in transition to STP.
Jo Pratt is the Product Owner for Single Touch Payroll at ADP Australia and New Zealand. From software to outsourcing solutions, organisations of all sizes take advantage of ADP’s deep expertise to free their teams and help them focus on driving greater business results. For more information, visit adppayroll.com.au or call 1300 961 734.