Single Touch Payroll 2018 ICB Meeting

1. Single Touch Payroll2018ICB Meeting Paul Simon Australian Taxation Office

2. Why is Single Touch Payroll so important? Streamlining Employee Entitlements • Reporting through natural business processes • On boarding new employees TFN and super choice through natural BMS • Prefilling W1 & W2 in BAS • Protecting SG entitlements • Earlier visibility of SG late or non-payments Levelling the Playing Field Real Time Information Fund • Building a platform for sharing information to other agencies • Can help prevent tax and other debts e.g. welfare overpayments • Reduces unfair competitive advantage • Ensures employers meet their obligations UNCLASSIFIED – Single Touch Payroll

3. What you need to know Who has to report? Employers with 20 or more employees will be required to report through Single Touch Payroll. The Australian Government has announced it will extend Single Touch Payroll to employers with 19 or less employees from 1 July 2019. This will be subject to legislation being passed in Parliament. When do I start reporting? Employers will need to do a headcount of the number of employees they have on 1 April 2018. If they have 20 or more employees on that date, they will need to start reporting to the ATO through a Single Touch Payroll-enabled solution from 1 July 2018. Which employees do I include? All employees within the ordinary (common law) meaning of ‘employee’. Excludes independent contractors, staff provided by a third party labour hire organisation, company directors, office holders, religious practitioners or any employee who ceased work prior to 1 April. What and how often do I have to report? Payments such as salaries and wages, pay as you go (PAYG) withholding and super informationat the same time you pay your employees. What wont I have to do if I report through Single Touch Payroll? Employers may not need to provide the ATO with an end of year payment summary. UNCLASSIFIED – Single Touch Payroll

4. What is changing?

5. How does Single Touch Payroll work? Natural business process • Member Contribution Report • Member Account Transaction Service Pay event submission Employee Payment to fund Salary or wages Payslip Employer completes their payroll run through their Business Management System (BMS) Employee Commencement • Employers will have the option to invite new employees to complete their Tax file number declaration and Superannuation standard choice forms online. • *currently being designed Bank Bank file BMS BMS Super contribution amounts reported to the ATO by the super fund What’s new Tax and super information is sent to the ATO through Standard Business Reporting 2 (SBR2) every pay day. Fund • Salary or wage information • Tax withheld • Super Guarantee liability • Employer information: • Employee information • Superannuation contribution UNCLASSIFIED – Single Touch Payroll

6. How the data will be used Information reported through Single Touch Payroll will be available for employees, employers and their agents through various platforms Pay event submission • Information will be pre-filled into myTax • Employees will be able to view their tax and super information Information will be prefilled W1 and W2 Labels *as of 1 July 2019 Information reported through STP will be displayed in the Tax Agent and Business Portals Sharing of data with other Commonwealth agencies UNCLASSIFIED – Single Touch Payroll

7. Examples of what you’ll be able to see What you will see BAS/TA Portals Business Portal BASAP Employer UNCLASSIFIED – Single Touch Payroll Screens will vary depending which platform you’re using

8. Helping employers to comply

9. Correcting a payroll event report We acknowledge there will be times your clients need to change the information they have reported • Correcting a payroll event • Must report within 14 days of detection • Report at next pay cycle • Report as an ‘update event’ Activity Statements Where amounts pre-filled at labels W1 and W2 in activity statements do not reflect payroll records for the relevant activity statement period employers will need to fix those amounts when they complete their activity statement. Employers only need to adjust the pre-fill in activity statements if the amount of the correction is over the materiality threshold (thresholds to be confirmed). Large withholders follow existing processes. Unclassified – Single Touch Payroll

10. End of year finalisation • Employers will be exempt from providing payment summaries where information has been reported though Single Touch Payroll. Tax Ready Finalisation Declaration • Employers make a finalisation declaration by providing a finalisation indicator for an employee as part of their Single Touch Payroll reporting. The information will be displayed as 'tax ready‘ for employees in ATO online services accessed through myGov. The information will be also be pre-filled in income tax returns. Amendments after finalisation If an employer identifies the need to amend details after making a finalisation they submit an update event with the updated details and ‘re-finalise’. Finalised information reported through Single Touch Payroll can be amended up to five years after the end of financial year. Employers will need to provide a payment summary for any payments not reported through Single Touch Payroll. UNCLASSIFIED – Single Touch Payroll

11. Our approach Data integrity STP implementation • We’ll focus on supporting developers and employers to transition into STP smoothly • We will be supporting employers with “health checks” • We will assist employers to be confident with their data • Co-operative learning Timely and constructive feedback • We will provide constructive feedback to employers • We will be timely and selective in engaging • with you when we notice anomalies • We will learn as more reports are received • We are trialling treatments with volunteer employers UNCLASSIFIED – Single Touch Payroll

12. How we will tailor your experience • We will tailor our engagement to your behaviours over time • High Trust • Green Lane • We will encourage and support you in maintaining a good client experience • with the lightest touch possible. • Help & Assist • Orange Lane We will provide tailored support and assistance to help you meet your obligations with the larger aim of helping you move towards the ATO’s target engagement behaviours. We will apply the law firmly and fairly to your non-compliance behaviours, while responding to indicators of positive engagement by providing help and assistance where that is warranted. Poor Compliers Red Lane UNCLASSIFIED – Single Touch Payroll

13. What your experience might look like Our treatments will range from reminders and nudges to more directive interventions where needed. SMS example: Correspondence example: UNCLASSIFIED – Single Touch Payroll

14. Deferrals and Exemptions

15. Deferrals How to apply Key Points: • Where a DSP has been granted a deferral, they will provide their Deferral Reference Number (DRN) and deferred date to their clients on ATO letterhead. This will ensure employers are confident they have a deferral in place. • Generally, the maximum time granted for a deferral will be 12 months • Where a deferral is granted, employers must commence reporting by the deferred due date Information on how to apply for a deferral has now been published on ato.gov.au UNCLASSIFIED – Single Touch Payroll

16. Exemption from STP reporting The Commissioner may grant a exemption if an employer is unable to report through Single Touch Payroll. • Generally for a full financial year and would most likely need to be reassessed each year. • Can be for class of employers or on an individual basis such as: • Seasonal employers • Internet accessibility • Other existing lodgement and payment obligations must be met. • Exemption criteria is currently in draft and is subject to consultation UNCLASSIFIED – Single Touch Payroll

17. Preparing for Single Touch Payroll

18. How to do your headcount on 1 April 2018 • Part time employees • Casual employees who are on your payroll on 1 April 2018 and worked during March 2018 • Employees based overseas • An employee absent or on leave (paid or unpaid) • Full time employees • Employees who ceased work before March 2018 prior to 1 April • Casual employees who did not work in March 2018 • Independent contractors • Staff provided by a third party labour hire organisation • Company directors, office holders or religious practitioners Include: Do not include: X UNCLASSIFIED – Single Touch Payroll

19. The Single Touch Payroll Timeline 1 JULY 1 JULY Start Date Small Business start date* Employment Commencement* ATO correspondence 2018 2019 1 APR *Transitional Period MAR JUNE 1 JULY Employee Headcount BAS pre-fill Commences* *Small Business - subject to legislation being introduced and passed *Employee Commencement timing to be confirmed *BAS pre-fill timing to be confirmed UNCLASSIFIED – Single Touch Payroll

20. The STP Checklist

21. The Single Touch Payroll Checklist #1 Speak with your provider • Find out how your payroll software provider will offer Single Touch Payroll reporting - this may be through an update to your existing software, or an additional service • Check if they have a deferred start date • Find out what support they will offer to their clients to transition to Single Touch Payroll • Subscribe to their communications – this may be email, newsletter, web updates #2 Talk to your tax professional • Find out how they can help you prepare • Subscribe to their communications – this may be email, newsletter, web updates #3 Plan your transition • Make sure the right people in your business know about Single Touch Payroll – especially your payroll staff • Check if you are paying your employees correctly • Check if you are calculating your employees’ super entitlements correctly • Check if you are addressing overpayments correctly • Is your employee information accurate, including names, addresses, • date-of-birth records? #4 Keep up to date with ATO • Visit ato.gov.au/singletouchpayroll and subscribe to any updates • Follow the ATO on Facebook, Twitter and LinkedIn • Make sure the ATO has the right contact details for your business or organisation UNCLASSIFIED – Single Touch Payroll