All employers big and small are now affected by new payroll rules and the Australian Taxation Office will be asking questions if you're not complying.

In 2018 the ATO introduced a new way of reporting tax and superannuation known as Single Touch Payroll (STP), the aim is to ensure that employees are paid their correct superannuation guarantee entitlements.

Under the new rules, employers will need to send the ATO tax and super information for each employee, every time they are paid. For example, if an employer pays fortnightly, the information must be sent to the ATO fortnightly.

Super funds will also be reporting to the ATO when employers make payments to employees. By matching up the data, the ATO will be able to check that the correct payments are made.

The new system was firstly limited to businesses with 20 or more employees when it was introduced last year; and from 1 July 2019 all employers are required to sign up to STP.

How to manage the new requirements

Most mainstream accounting and payroll software now includes STP features but you’d be wise to check that yours complies, says Tracy Angwin, Chief Executive Officer of the Australian Payroll Association.

“There are no more wages books – you’ve got to have online payroll,” she says.

If you don’t want to do your own payroll, Angwin says it’s not good enough to hand it over to your accountant. “They’re not payroll professionals; use a managed payroll provider to do it. Don’t skimp on it,” she says.

Given the complications of payroll and the high-profile failures in recent times, Angwin says “it pays to get it right”.

“My advice to anyone with less than 50 employees is to put it in the hands of somebody who knows what they’re doing.”

But for those planning to keep it in house and use their payroll software, Angwin says double check that the system is set up correctly.

“For example, you’ve got to have your coding right. If it’s wrong, you’re going to be paying SG (Superannuation Guarantee) incorrectly. You don’t want to find at the end of the year that you owe someone $10,000 in super and you haven’t got it,” Angwin says.

“Flexible, reasonable, pragmatic”

Commissioner of Taxation Chris Jordan says while the move to real-time digital reporting may be a big change for employers, “the ATO will adopt a supportive, tailored approach to help them undertake this change”.

To make STP as accessible as possible to all businesses, the ATO worked with software providers to develop solutions that are easy-to-use and low-cost, including simple payroll solutions, portals and mobile apps. A list of providers is available on the ATO’s website.

“I want to reassure small business and give my personal guarantee that our approach to extending Single Touch Payroll will be flexible, reasonable and pragmatic,” says Jordan.

The ATO is offering extra help to micro employers with one to four employees to transition to STP.

Small employers (those with up to 19 employees) may ask for extra time before beginning STP reporting and there will be no penalties for mistakes or late reports for the first year.

No penalties will be applied in the first year to any small employer who makes a genuine attempt to switch to STP reporting or put in place arrangements. And there will be exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.

Jordan encourages employers to contact the ATO with any questions or concerns about STP.