This year is likely the last that businesses will need to generate payment summaries for employees, with the roll-out of Single Touch Payroll set to remove the onerous task.
Annual payment summaries are currently required for employees to file their tax returns at the end of each financial year.
But one of the benefits of the new Single Touch Payroll (STP) reporting system is that it will make the issuing of such summaries redundant.
Under the new digital system, employers feed payroll data to the tax office automatically with every pay run, including year-to-date data on employee earnings and tax withheld.
This will be made available to employees in real time via their myGov accounts, eliminating the need for employers to manually generate a report for every employee at the end of the tax year.
In a guide for employees on the incoming changes under STP, the ATO said that “your employer is not obliged to give you an end-of-year payment summary for the information they report through STP”, noting that the law has changed to reflect the new reporting system.
Your payment summary information will be available in myGov at the end of the financial year.
Your payment summary information will be called an income statement in myGov. This is the equivalent of your payment summary (some people may still refer to it as a group certificate).
The ATO will send a notification to your myGov inbox when your income statement is ‘tax ready’ so we can complete your tax return.
The guide notes that the roll-out of STP is being staggered, and that some employers may opt to still provide a payment summary under their first year of reporting.
In addition to wages and tax information, employees will also be able to see employer payments of superannuation contributions via their myGov account.
STP is already being used by employers with 20 or more staff members since it was introduced from 1 July 2018, making this the first year-end they will be able to avoid generating payment summaries. It will be extended to smaller employers from 1 July this year, making the end of the 2019–20 financial year the first time that most small business employers will be able to go “payment summary-free”.
Small businesses are able to adopt the new reporting framework earlier if they choose to do so. A three-month leeway has also been announced to help smaller employers make the transition in the new financial year.
If you need any assistance at all with setting up STP for your business please contact Toni Brunsgard of our office on 9387 5637.
Source: Mybusiness (19/03/2019)