How to set up your business for single touch payroll compliance


The Australian Taxation Office (ATO) reports that, as of 1 July 2018, companies with 20 or more people on staff will be required to comply with a new system of real-time wage reporting called Single Touch Payroll. If you have fewer than 20 employees, you have an extra year, or until 1 July 2019, to fully transition over to this new system.

Though the possible penalties of noncompliance aren’t revealed by the ATO (likely because they do offer a 12-month transition period), eventually they will be enforced. So, regardless of your company’s actual deadline, you may be wondering what you need to do to create a payroll structure that is fully compliant with this new law. To help you with that, here are a few actions to consider.

Do a Headcount

Although Single Touch Payroll isn’t going to be enforced until the beginning of July this year, at the earliest, the ATO still requires that a headcount be completed on 1 April 2018. This tells both you and them whether you are a ‘substantial employer’ by employing more than 20 people, or if you have another year before being mandated to comply.

Employees who should be included in your headcount are those you employ full and part-time, as well as any employees who are seasonal or currently on leave. Employees that should be left off the headcount are those who are casual employees that didn’t work in March, independent contractors, office holders, and religious practitioners.

Review Your Current Payroll Process

According to human resource-based software company Roubler, the next step to getting your business ready for Single Touch Payroll involves looking at your current payroll process. This helps you understand what changes, if any, need to be made to become better aligned with this new law.

If you’re a solopreneur or handle your payroll yourself, you already know what your current payroll process looks like. But if not, if you have a human resources department or pay another company to provide payroll services for you, some investigation will likely be required on your behalf.

Update Your Payroll Software, If Necessary

The whole point of the new payroll system is to create a more streamlined method of sharing your employees’ wage information, allowances, and deductions with the ATO in a more timely fashion. Therefore, if your current software isn’t able to transmit the requested data to the ATO each and every payday, now is the time to update to a program that does.

If you use cloud-based payroll software, handle your payroll through an online service, or pay a payroll services company to calculate all of your employees’ paychecks for you, check with them to verify that they will be compliant by your specific deadline. If not, you may need to find a company or software provider that will be, reducing the likelihood that you’ll run into issues with the ATO.

Monitor the Process

Once your payroll system is set up for Single Touch Reporting, it’s important to monitor the process, at least for the first few reports, to ensure that all of your information is transmitting correctly. What do you do if you realize that you made a mistake?

In their employer checklist, the ATO explains that errors can be corrected in future Single Touch Payroll reports. This enables you to stay in compliance while still learning the system and making sure it works.

Do these four things and you’ll be well on your way to creating a payroll process that is compliant with Single Touch Payroll. Though change isn’t always easy, sometimes it is necessary and, since this is the new law, necessary it is.