Single Touch Payroll is the ATO’s new requirement for businesses to submit their payroll details. It will give the ATO real-time visibility into payroll processes while streamlining tax and superannuation obligations for employers.
The introduction of Single Touch Payroll should have minimal impact on your business. It is important to familiarise yourself with these changes and be prepared.
What is Single Touch Payroll?
Single Touch Payroll is a one-click solution for your payroll process. As you pay your employees it will allow you to report PAYG withholding, superannuation and wages directly to the ATO.
Payroll software providers have been working with the ATO and will include this functionality in an updated version of their software.
When does Single Touch Payroll come into effect?
From July 1, 2018, Single Touch Payroll will be required for all businesses with more than 20 employees. Businesses with fewer than 19 employees will have another year to prepare, however, may start Single Touch Payroll reporting voluntarily if their software allows.
What does Single Touch Payroll mean for your business?
Single Touch Payroll is intended to give employees greater visibility on their wage details and superannuation entitlements. Employees will be able to access this information through the MyGov website.
It also means the ATO receives real-time information. They will be able to intervene earlier if a business isn’t paying superannuation or lodging Business Activity Statements (BAS) and Income Activity Statements (IAS).
Failing to lodge, or discrepancies in figures may mean the ATO commences an audit or review to verify the figures.
How to prepare your business for Single Touch Payroll
Your payroll software provider will introduce Single Touch Payroll to your business. This means there is minimal work for business operators to ensure they comply.
On April 1, conduct a headcount of your employees to find out if you have 20 or more. If you do you must start using Single Touch Payroll on July 1. You can be prepared by completing the following:
- Talk to your software provider about Single Touch Payroll and ask if you need to do anything to prepare your system.
- Review your payroll processes to ensure they include Single Touch Payroll.
- If you don’t currently use payroll software, speak to your BAS or Tax Agent for advice about choosing the best product for your business.
- If you have software: talk to your provider to find out how and when your product will be ready
- Schedule the software update when it is ready.
- Start reporting to the ATO through Single Touch Payroll.
What happens if you can’t pay your Super or BAS debts?
In the past when businesses couldn’t pay their BAS debts, lodgements have fallen behind or withheld in an attempt to hide the debt from the ATO. This is usually done in the hope of catching up over time.
With this new system in place, the ATO will have real-time electronic reports of who hasn’t lodged. Rather than letting BAS and SGC debts accrue, companies that can’t pay their debts when due will need to be proactive.
Companies in this position can no longer hide. If they don’t lodge, the ATO may commence enforcement action of outstanding lodgements, and audit the business or start debt recovery action. A company without the capacity to pay will need to enter an ATO payment arrangement, access alternative finance or seek insolvency advice.
Failing to pay any tax debt may result in the ATO taking further action. This can include issuing either a garnishee notice, director penalty notice or statutory demand to commence winding up proceedings.
Want to talk through your situation?
Tax Debt Resolved are specialists in assisting SME businesses. We can conduct a tax and solvency review while outlining options available to you and implement the appropriate solution for your business.
For more information on tax debt solutions, check out our tax debt page.