What is Single Touch Payroll and How does it work?
What is Single Touch Payroll and ATO
Payroll processing is mission critical and can be a very painful task and take up a lot of time every month. Historically businesses have always had to report certain information to the ATO. Single Touch Payroll aims to streamline that process. Specifically small to medium sized business would summarise their tax and super payments and notify the ATO. This is all a part of the end of financial year reporting and is mandatory. Single touch payroll requires that tax and super information is automatically shared with the ATO each time you process your payroll.
Single touch payroll came into effect on the 1st of July 2018 and was made mandatory for business with more than 20 staff. Single touch payroll is easy to comply with if you use online payroll software such as EmployeeConnect Payroll, Keypay, Xero and MYOB. When you process your payroll tax and super information will be sent to the ATO automatically. It becomes a little trickier if you use a manual process to manage your payroll or a desktop version of a payroll system. Then you will have to be able to convert your payroll reports into a format the ATO accepts and submit them through a provider to ensure compliance. Single touch payroll phase 2 came into effect on the 1st of January 2022. This was an aim to further reduce the reporting burden for payroll officers, it will also help achieve delivering other payments on time.
In other words, how you send super and payroll tax information to the ATO depends on the software you use. After you process your payroll, you can either send the information:
- Directly to the ATO form your payroll software.
- Through a third-party sending service provider which integrated with your payroll software.
- Through a third-party sending service provider outside of your software which you will have to provide a report.
The Benefits of Using Single Touch Payroll
Single touch payroll has many benefits. Firstly, you will no longer have to submit payment summary annual reports. Updating the ATO on a pay-by-pay basis means you don’t need to prepare a payment summary annual report, they are now a thing of the past. All that the ATO needs to be notified of is when you have run your last pay run for that financial year. Payment summaries will no longer need to be sent to employees anymore. The ATO will utilise single touch payroll as the source of truth for any wages paid, taxes and superannuation payments. Employees will now access their payment summary by logging into their myGov account.
Single Touch Payroll ringing true to its name has streamlined end of financial year reporting and has made it easier for most payroll managers to report to the ATO. As technology improves payroll systems continue to enhance the way we deal with payroll and employee data. It is important to keep up to date with any changes and single touch payroll assists significantly with this. Utilising new payroll technology will ensure you remain compliant and up to date requirements enforced by the ATO.
Unleashing Your Strategic Payroll Potential
Using HCM software helps, but it’s critical to integrate your business applications to get the best results. Strategic payroll can anticipate many situations such as accommodating growth projections, analysing how growth might affect payroll and providing early warning when increased hiring becomes necessary. Strategic payroll isn’t static; it adapts based on legislative changes, new industry regulations and the corporate imperative to make continuous improvements to attract and retain top talent.
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