Preparation is the key to remaining compliant once Single Touch Payroll launches in July, writes Matthew Ryan
The payroll industry in Australia is consumed by the launch of Single Touch Payroll (STP) by the ATO on 1 July 2018. After that the ATO will have unprecedented access to the operational data of businesses – both what’s reported and the frequency of reporting. That’s great for transparency, but consider the potential for error in this data and the issues this could create for you: the back and forth of getting the data right or, worse still, the risk of posting incorrect data that flags an unnecessary issue to the ATO. Ouch! You don't need more reporting issues, right?
The best approach is to get your data right to begin with. This is a two-step approach.
Step 1: Check it once, check it twice…do it now!
Get your employee records in order now. Typically you may do this once a year as part of the end of financial year process, but now you’re reporting on this data every time you run the payroll – you need to stay on top of your record-keeping. Items you’ll need to address include:
- capturing tax file numbers within 14 days of your new employee’s start date
- reviewing your superannuation policy for simple and timely capture of employee fund details
- validating that current timesheet data capture is efficient and reliable... ditch paper timesheets
- reviewing all pay codes and documenting how they should be classified for tax, superannuation and workers' compensation
Tip: The ATO will see if you’re applying your superannuation calculation correctly with every pay run and super guarantee fines may still apply if you’re not doing this correctly.
Step 2: Keep on checking... before you show the ATO
Now that you're sending all this payroll data to the ATO (with every pay run), you don't want to be dealing with loads of error files and, worse still, to unintentionally be flagged by the ATO because of a reporting mistake. Make sure you have a process to review the data before approving it to be sent to the ATO.
You may have reports you can generate in your payroll system to help you check the data, but the ATO transmission file is complex. At ADP we’ve developed a solution to limit errors. Our STP data review system will validate your data through multiple layers of checks. You can work through a report card of items that need to be addressed. Importantly, this is all done before the ATO sees the data. Remember your goal is to meet your compliance obligations without adding to your operational burden. Check it before you send it.
STP’s first action was due 1 April! This is not a joke
STP is mandatory for all “significant employers” from 1 July 2018 (that’s all employers with 20 or more employees). Unsure if that’s you? Then you will need to perform a head count test as of 1 April 2018. It was a Sunday, so you may have missed it. So go back to your employee records and do a check as at that date. At our recent webinar with the ATO, this was the hot topic. So let me address some of those points now:
- You need to include all employees on your payroll as of 1 April. Yes, ALL employees (full-time, part-time, casual, seasonal, those that may be overseas or absent or on leave).
- Don’t include company directors, employees who ceased work before 1 April 2018, independent contractors or staff provided by third-party labour hire organisations.
- You don’t need to submit the head count to the ATO; it’s a self-assessment. You need to keep a record that you did this (when and the data for your test). If the ATO asks why you’re not complying with STP, you’ll need to show details of your test. So be sure!
If you need assistance with your head count, check out ADP’s head count guide at adppayroll.com.au.
There is a lot to get moving on with the introduction of STP. Good data and strong data management processes have always been important. With increased visibility to the ATO through STP, your data management processes are now mission critical.
Matthew Ryan is the marketing director for ADP Australia and New Zealand and is executive sponsor for the project to implement STP solutions at ADP. 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.
