Question

Part B

Answer the following questions

1. Describe the process for issuing payment summaries to employees as was required under legislation prior to 1 July 2018.

2. Legislation regarding payment summaries changed in 2018. What was the impact of that legislation change and describe the current process?

3. How would you produce, review and store payroll records relating to employee salary packaging arrangements and additional allowances according to Little Pear Group organisational policies and procedures?

must be related to Australia

Answer 1

Ans-

Australian lawmakers passed legislation that requires even the smallest of employers to electronically file each pay run with the tax office using Single Touch Payroll (STP), starting 1 July 2019. Here is our guide and your key questions answered.

Single Touch Payroll (STP) was introduced on 1st July 2018 for all businesses with 20 or more employees. The laws to extend the Single Touch Payroll (STP) reporting requirements so they apply to all employers with less than 20 employees has now passed the Senate and will be Law.

This means STP is set to be rolled out in stages to smaller businesses with less than 20 employees as at 1 July 2019.

Whilst there are still elements of the STP rollout for smaller businesses that need to be defined by the ATO, what is clear is that you need to be aware of what STP is, and what it will mean for you into the future.

What do you need to know?

STP will require you to have your payroll transaction data transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to and from the ATO on your behalf.

This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:

• each employee's name and tax file number (TFN)
• gross amount paid
• tax withheld on the gross
• ordinary time earnings for the period, and
• any superannuation guarantee obligations

The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.

As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.

If your accounting system is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm if your product is STP compliant.

If you are using Xero (as most of our clients are) then you can rest assured – Xero is STP compliant!

However, if your system is still manual it is now time to discuss and review your internal processes. The STP regime is mandatory for employers of more than 20 staff from 1 July 2018, and will be mandatory for all employers by 1 July 2019.

The ATO has also just released the following update about STP:

• Micro employers (1-4 employees) will have time to transition and your Accountant will be able to report quarterly for you for the first two years
• Small employers (5-19 employees) will be given a grace period of until 30 September 2019 to be submitting live pay data
• Deferrals and exceptions are available for employers experiencing hardship, or in areas with intermittent or no internet connection

Our advice is to become STP ready to avoid any fines or penalties in the future from the ATO. In the event that you need a solution or just want your system reviewed, we are happy to help by advising a suitable cost effective solution.