Single Touch Payroll
From 1 July 2019, you will have to transfer your payroll transaction data to the ATO each time your employees are paid using a software solution to do this.
For ongoing reporting and payments, this means:
- There will be no need to complete W1 and W2 (Wages & PAYGW) figures on ATO activity statements.
- If your business is currently not reporting GST and you are lodging electronically (ie. Instalment Activity Statements), you will lose your current 2-week extension period.
Please note if you are not compliant with the lodgement and payment provisions you may lose the ability to claim Wages as a tax deduction for the business.
How do employers get ready for Single Touch Payroll?
Because you will need to submit compliant reports every payday, you will need a payroll or reporting system that is STP compliant. If you are not sure what to do or have no system to lodge please contact us immediately so we can discuss the range of solutions we have for you to use.
How do employees get ready for Single Touch Payroll?
Employee don’t need to do anything other than make sure they have access to their MyGov account if they don’t use a Tax Agent to prepare their tax return. Employers after this year will not be required to provide you with an PAYG Summary at the end of the year. The ATO will have this information and provide it to employees via their MyGov Account or through their tax agent.
Effective 1 July, 2019, the following changes could affect you:
- Insurance policy cancelled for inactive accounts: if your superannuation account has not had any contributions either by you or your employer for a continuous period of 16 months, regardless of the balance, then your default TPD and income protection insurance will be cancelled. Simply, you will not be covered if the unthinkable happens.
- Inactive super accounts with low balances will be closed: if you have stopped work temporarily, taken maternity leave or even started your own business, you probably aren’t receiving any payments into your super account and you could be at risk of not having any cover or having your account closed and transferred to government operated super fund MyGov.
- Cap on fees for accounts with low balances: a positive change in that if your account has a balance of $6000 or less, fees will be capped at 3% per annum, ensuring the funds aren’t eaten away by fees and charges.
- No exit fees: if you wish to change funds you will no longer be slugged with penalty charges as exit fees will be banned across the board.
So what can you do to make sure you are covered from 1 July?
Contact your superannuation fund and elect to opt-in to the default insurance regardless of your account being inactive.
Make your own contribution into your account which will reactivate the account for a further 16 months.
Importantly, make sure you read all emails and letters your super fund sends you. It’s important that you invest time now understanding what insurances you do and don’t have in your super before you need it most.