SINGLE TOUCH PAYROLL IS COMING TO A RESTAURANT NEAR YOU
Look out for Single Touch Payroll. Over time, hospitality employees have been paid in many forms: in kind, cash, booze, meals, cheque or direct transfer to a bank account. Managing a hospitality payroll can get messy and difficult to reconcile correctly. You find yourself paying the staff this week, but you don’t need to pay their superannuation or PAYG taxes for another few months. It can get a bit much to keep track of what you owe and when.
To improve the monitoring and accuracy of payroll obligations of all businesses in all industries, the ATO has implemented new electronic procedures that will closely monitor wages, superannuation and PAYG taxes each time you run a payroll. Whether you pay staff weekly, fortnightly or monthly, the ATO will now have detailed information on each transaction as you do it – every single time!
It’s called: Single Touch Payroll (STP).
How do I know if my food business has to be connected to Single Touch Payroll?
There are 2 implementation dates: 1st July 2018 and 1st July 2019. A headcount of employees determines which date will apply to businesses.
20 OR MORE EMPLOYEES:
- Effective 1st July 2018, businesses with 20 or more employees are considered a substantial employer and must have accounting software and systems ready and connected to the ATO portals.
If the business is a member of a wholly-owned group, and that group has 20 or more employees, they they must also report as of 1/7/18.
(This has been passed in parliament and is mandatory).
- LESS THAN 20 EMPLOYEES:
Effective 1st July 2019, businesses with less than 20 employees have an extended implementation date to next year. (This is subject to legislation in parliament). However, you can implement voluntarily on or after 1 July 2018.
How do I count the employees?
Do a head count of all employees regardless of whether they are full time, part time or casuals as of 1st April 2018. As you may have a lot of casuals on your books, only include the casuals that worked during March 2018. Employees based overseas are counted, and employees who are absent or on leave are also counted. It’s self-assessed, which means the employer should make this assessment themselves. There’s no requirement to register this count with the ATO, but it should be recorded somewhere. So you need to keep a record of the self-assessment that you’ve made to demonstrate compliance in the event of an audit.
Once implemented, if you drop below 20 employees you must still continue to report via Single Touch Payroll.
Some of the employees that are not included in the headcount: independent contractors, employees of labour hire organisations, company directors, officer holders, and religious practitioners. However, when you start reporting through STP, you will need to report their payment information. This is because the payments are subject to withholding and are currently reported in the payment summaries.
Example Headcount #1: A business of 20 or more employees must be ready for STP as of 1st July 2018.
3 x full time chefs
3 x part time chefs
1 x casual chef
1 x labour hire sous chef (not counted)
3 x part time admin staff
10 x casual wait staff
1 x company director (not counted)
20 = total number of employees
Example Headcount #2: A business of less than 20 employees that can voluntarily implement STP or wait until 1 July 2018.
1 x full time chef
1 x labour hire sous chef (not counted)
1 x casual bartender
1 x casual barista
3 x casual waiters
2 x company directors (not counted)
6 = total number of employees
What can’t be reported through STP?
The super income streams and annuities, lump sum payments, things like Social Security, and where the recipient has not quoted an ABN – those sorts of payments to contractors, where they don’t quote an ABN, are not reported through Single Touch Payroll.
BENEFITS OF SINGLE TOUCH PAYROLL
- Employees can log in and see their year to date tax and super information online via their myGov account ATO online services.
- Employers no longer need to give employees end of year payment summaries as the information will be reported via STP.
- PAYG Witholding and Superannuation payments will be monitored for compliance and payment. Employers may or may not see this as a benefit. It is definitely a benefit for employees.
- Employees starting a new job may have the option to electronically complete a pre-filled Tax File Number Declaration and Superannuation Standard Choice form online.
- From July 2019, the ATO will pre-fill activity statement labels W1 and W2 with the information they’ve received from you. If you are a small to medium withholder, you will continue to lodge an activity statement as you do now.
CHECKLIST FOR SINGLE TOUCH PAYROLL
- Do a headcount of your employees as of 1st April 2018.
- Speak to your payroll software provider. Eg: Xero, MYOB, Quickbooks, etc.
> Check if the software will be compliant and ready by the due dates. Update to new software if necessary.
> Find out what support is offered.
> Subscribe to their communications, social media and newsletters to get the latest updates.
> If you don’t have software, choose a product that offers STP. Ask your BAS Agent or Tax Agent for advice on which suits your needs.
- If you don’t have a BAS Agent bookkeeper, find one who can help you set up your software and compliance now.
- Review your business processes.
> Ensure your payroll staff know about the STP changes.
> Check if staff members are being paid correctly – awards, super, taxes, entitlements.
> Check if employee information is accurate: names, addresses, dates of birth, tax file numbers, super numbers, etc.
- Ask your BAS Agent bookkeeper if your business has an AUSkey to connect software to the ATO.
- Encourage employees to get their own myGov online account with the ATO. It’s a fast and simple way to access government services online and track their wages status.
The Australian Taxation Office is keen to see transparency in all businesses, and they’re starting with payroll.
Time to prep! Mise en place!
Christine Green and team
Call Restaurant Bookkeepers Australia now on 1300 043 327 to start a fresh change in your food business.
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