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Small business owners with fewer than twenty either full- or part-time employees should be prepared for several tax changes during the new year. The most notable of these revolves around the new Single Touch Payroll initiative which will be mandatory following July 1st, 2019. The initiative has already become mandatory for larger businesses and some helpful words of advice from this experience could be useful for those who have not yet been affected.
As with any new procedure, it’s important that you are aware of your new responsibilities in the new year. You need to take the time to fully understand what is required of you in the New Year, what data you are required to submit and what other obligations you have to the Australian Tax Authority (ATO). With the right information on your side, you will avoid running into problems when the new initiative comes becomes mandatory in 2019.
Continue reading to learn more about what you need to know in order to prepare your business before the deadline arrives in the New Year.
Single Touch Payroll (STP) Basics
Single Touch Payroll is simply a new method of reporting employees’ tax information to the Australian Tax Office (ATO). From July 1st, 2019 and beyond, it will be necessary for employers to submit information on wages, salaries, PAYG withholding and superannuation for each payday. It is currently running on a voluntary opt-in basis for businesses who have fewer than twenty employees.
The aim of the program is to provide real-time information to the ATO regarding companies’ payroll processes. It is part of the broader Australian Federal Governments Digital Transformation Agenda which is aimed at streamlining information sharing between the Federal Government, the business and the individual.
How Can Employers Prepare for the STP Changes?
Under the new initiative, employers will be required to submit employment information for all employees and for each “pay event” to the ATO. This must be completed either via payroll software or – if you still use spreadsheets or pen and paper to fill out payroll information – through a third-party service to convert the data into an appropriate format. Previously, it was only necessary to finalise an annual payment summary report for the ATO and for each employee but this is no longer the situation.
Make sure that your payroll software is up-to-date and in accordance with ATO requirements. Assess your current payroll structure and ensure that your employee information is current. The STP changes are fairly straightforward to implement provided that small businesses are prepared for when the time comes. It is important to remember that your current payroll schedule will not be affected. You can continue to pay your staff on a weekly or biweekly basis as before. You are also still required to provide payslips for your employees.
If you think that you will need more time to adjust your payroll operations before July 1st, 2019, you can apply for a deferral. Be sure to provide valid evidence to assert your case.
Other Tax Changes for the New Year
Beyond the Single Touch Payroll initiative, employers should also be aware of the Superannuation Guarantee Amnesty. The Amnesty is a one-time opportunity for employers to self-correct any past super guarantee (SG) non-compliance without any risk of receiving a penalty. Consider looking into this option if you believe you might fall into this category. This option is available between May 24th, 2018, and May 23rd, 2019.
Enjoy a Profitable New Year Without Tax And Payroll Worries
As we move into the new year, it should be clear that the new changes for Australian employers should not be a cause for alarm. Having updated payroll software can help make the transition seamless and if your business does not currently use such programs then perhaps now would be an ideal time to explore some options. Prepare your business for these new regulations early and your business will be able to adjust without problems.
