This coronavirus business resource helps Australian startups and SMEs understand the financial implications of COVID-19 and the support available.
Ready for single touch payroll?
From 1 July 2019, single touch payroll will be required for everyone. No matter how many employees you have.
This affects a number of our clients so we thought we’d share the love and explain what it means for everyone who will be affected by the final roll out of single touch payroll.
What is single touch payroll?
It means electronically filing each pay run that you do with the ATO.
So every time you do a pay run, you need to report your employees’ salaries, wages, allowances, deductions, pay as you go (PAYG) and superannuation information.
It might sound onerous but it’s all handled through payroll or accounting software so it should actually make life easier … but more on that below.
For now, it’s worth being aware that the ATO introduced single touch payroll last year for businesses with 20 or more employees.
Now it’s being rolled out to all businesses. So whether you’re paying 1, 21, 201 or 2001 people, you’ll need to comply with single touch payroll requirements from 1 July this year.
How do you do it?
First up, it’s important to note that you don’t need to change your pay cycle. You can continue to pay your employees weekly, fortnightly or monthly.
With that in mind, there are a few options.
And we should start with a disclaimer – we’re a Xero gold partner so we’ll obviously talk about them. But we do honestly believe Xero makes things easy, and it’s cost-effective.
But if you don’t want to go down that path and already have an accountant, talk to them about handling your single touch payroll obligations. It shouldn’t cost you much more than what you’re already paying them.
If you have four or fewer employees, Xero recently announced some options:
- A new payroll-only product (price yet to be determined but expected to be about $10/month)
- If you’re already doing your own books through Xero, you can add payroll
If you have more than four employees (but still fewer than 20), and you’re already using Xero or other accounting software, you should be able to continue using it with a single touch payroll feature (side note: if you’re with us, this won’t cost you anything extra).
And if you have more than 20 employees, yikes … you should have been doing single touch payroll since last year. Let us know if you need help getting up to speed!
Is single touch payroll good news?
Short answer: Yes.
You might expect us to say that but remember, we’re not benefitting from it financially.
We think it’s good news for a number of reasons. Firstly, it helps all employers get rid of spreadsheets, post it notes, or whatever they’ve been using for payroll and do it electronically in a trackable way. Once it’s set up, it will save you time and simplify your life. Trust us!
It also means you won’t need to provide payment summaries to your employees (except you will still need to for payments that don’t go through single touch payroll, such as employee share schemes).
You won’t need to provide the ATO with a payment summary report at the end of each financial year (unless you have payments that aren’t covered by single touch payroll).
And, your employees will be able to see their payment info through the ATO’s online services, which can be handy and helpful for them.
As with all of our blogs and resources, please don’t take this article as personal tax advice. Speak to us if you want help getting set up for single touch payroll, or to understand what it means for your business.
There’s also more info about the rules of reporting through single touch payroll here.
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