Australia: Introduction of Single Touch Payroll Reporting

From July 1, 2018, there will be fundamental changes to how employers report payroll information to the Australian Taxation Office (ATO). The introduction of a new “single touch” payroll regime will require widespread systems changes.

While employers currently deduct tax and superannuation from employees at the time of payment, there are a number of scenarios in which those withholding amounts are not required to be paid across or reported to the ATO for days or even months later. The single touch payroll regime will require remittance of pay-as-you-go (PAYG) tax withholding amounts and reporting to the ATO to occur simultaneously with payments to the employee. Superannuation reporting will also be required when a contribution is made to the employee’s superannuation fund.

This immediate employer reporting and remittance will require significant systems changes and will be particularly complex where cross-border employment is in play. Currency conversions, equalization true-ups, gross-up calculations and expatriate employee scenarios will all entail a good degree of change requirements.

The new procedures are optional from July 1, 2017, but be required for employers with 20 employees or more from July 1, 2018. Radius recommends an early review of payroll processes and systems.