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  • The rules of reporting through Single Touch Payroll

    Each time you send us your Single Touch Payroll (STP) report it will include minimum reporting requirements in order for you to meet your STP obligations.

    Your updated software will capture the data we require. We have outlined these requirements below.

    • You are required to report a pay event to the ATO on or before the pay day. The pay day is either the payment date stipulated in the electronic transaction to your financial institution or, if you did not stipulate a date for payment, the date you intend to make the payment into your employee's bank account.
    • If you include out-of-cycle payments in your regular pay event, report the date of your regular pay day.
    • The report must include, at a minimum, each employee with an amount subject to withholding paid in that regular pay cycle. The report may include information for other employees.
    • You must report the year-to-date values of gross salary or wages, allowances or other payments (as relevant), deductions and PAYG withholding for each employee included in that pay event.
      • These year-to-date amounts may be less than a previous report (for example, recovery of a current year overpayment).
      • These amounts can be zero, however, they cannot be negative.
       
    • You must report year-to-date employer super liability or ordinary time earnings (OTE) amounts for each employee in that pay event.
      • If you pay above the minimum super guarantee (SG) liability, report this higher amount if you can't separately identify these in your payroll solution.
      • If your year-to-date employer super liability is zero, report zero.
      • If your employee is a member of a defined benefit fund and you make super contributions for the employee, report this amount. Otherwise, report zero as the super liability amount. This would usually correspond to the year-to-date amount shown on the employee’s payslip.
      • Where you cannot report super liability you must report the year-to-date OTE amount.
      • You can report both OTE and employer superannuation liability if your payroll solution allows.
      • We will compare the amounts you report with information we receive from super funds. If we identify your contributions vary significantly from the liability reported, we will contact you.
       
    • You must report period gross salary or wages (BAS label W1) and PAYG withholding (BAS label W2) for all employee payments included in that pay event.
      • These are your 'employer-level amounts'.
      • These amounts may be negative because of fixes you've made.
      • These amounts would generally correspond to the amounts you posted to your general ledger for the pay run.
       
    • All payees must have either a tax file number (TFN) or Australian business number (ABN) reported.
      • Where you report a payment and withholding to a contractor under a voluntary agreement, you must provide the contractor’s ABN. The contractor’s TFN is not required. The reporting of these payments through STP is voluntary.
      • Where a TFN has not been provided you must use the TFN exemption codes.
      • A payee may be a contractor and employee with the same payroll ID within the same financial year. If so, the TFN and ABN must be reported if payments are made under both a voluntary agreement and any other gross payment.
       
    • A pay event must contain at least one employee record.
    • A pay event can only include one record per employee, per payroll ID.
      • If you establish two payroll records for an individual you can report these payments within the same pay event by using unique payroll identifiers. You must report separate year-to-date amounts for each unique payroll identifier for an employee.
       
    • Where an employee is paid more than once on a particular day, you may provide a single report for that employee including the latest year-to-date figures (for example, updated year-to-date figures including all payments made for the day).
    • You may lodge multiple pay event files for the same day. Your system will generate a time stamp which is used to identify the latest record for each employee to ensure the employee’s myGov display recognises the latest record.

    Reporting based on your current business structure

    You can report based on how your payroll is currently structured. The pay event should be generated at an:

    • ABN
    • branch
    • business management software identifier (BMS) ID level.

    If an employee is paid out of two systems there will be two corresponding employment income statements for each payroll record reported.

    PAYG withholding branches

    Some business entities register PAYG withholding branches to suit the structural, management and accounting arrangements of the organisation. When an entity registers a branch, it must report and pay PAYG withholding separately for each branch.

    If you have registered multiple PAYG branches, you must conduct your STP reporting separately for each branch.

    Multiple payroll solutions

    If you currently use multiple payroll solutions, you can report separately from each payroll solution. This will be identified by the payroll solution via a unique BMS ID, which forms part of the pay event file.

    Most products will allocate the BMS ID for you as part of making their products STP-enabled. If you have more than one payroll solution, you will need to ask your providers about your BMS ID.

    Multiple employee records

    Where an employee is recorded more than once under the same ABN/Branch/BMS ID then each payroll record of the employee must be reported using a unique payee payroll ID.

    These separate payee payroll IDs will be treated as a unique record for STP reporting and must have separate year-to-date amounts for each payee payroll ID.

    For example, where an employee works within an organisation under two separate roles/awards and has been created as if they are two unrelated employees, the employee can be reported under multiple payee payroll IDs within a single pay event.

    Reporting for multiple ABNs

    If a related entity will be submitting STP reports on behalf of other ABNs within a group, that entity needs to be have a business appointment to lodge on your behalf.

    This business appointment can be completed in two steps:

    1. Use the Cross entity authorisation nomination form (NAT 73957) to nominate another ABN to act on your behalf.

    2. The AUSkey administrator for the business must assign the appropriate role to the authorised AUSkey holder.

    Out-of-cycle reporting

    You may make payments to employees other than as part of the their regular pay cycle, such as when you pay commissions, bonuses, payments in advance or back payments.

    These payments may be reported by either:

    • submitting a pay event on or before the pay day you made the payment
    • including the out-of-cycle payment made to the employee in the next regular pay event you lodge. If the next regular pay cycle is in the following financial year, you must report the payment by 30 June in the year the payment was made before you finalise.
    • This is distinct from an ad hoc payment that is generally either run as a calculation simulation or as an advance of the regular salary (which is deemed as a loan) and should be reported at the time the actual salary is calculated.

    Example: out-of-cycle reporting

    ABC Pty Ltd pays its employees monthly. The employment agreement stipulates that employees should receive their pay on the 15th of every month.

    On 30 March, Matthew, an employee of ABC Pty Ltd, earns a commission of $1,000. On 31 March, ABC Pty Ltd processes Matthew's commission through payroll.

    ABC Pty Ltd has two options to report the payment made to Matthew, either:

    • report this payment to Matthew through a separate pay event (that is, not the regular 15th of the month pay event)
    • include the commission payment to Matthew when it submits the next regular pay event (the pay event with the pay date 15 April).

    *Note: some STP-enabled solutions may not offer both options.

    End of example

    Employment termination payments

    If you make an employment termination payment (ETP) you must report it in a pay event on or before the day you make the payment.

    If the payment is not made as part of your regular pay cycle, you may apply the same rules that apply to out-of-cycle payments. That is, you may report it as a new pay event or include it in your next regular pay event report.

    ETPs are reported by ETP type code and payment date. If you pay the ETP in multiple instalments, you will report each payment separately. If you pay multiple ETP types on the same day, they must still be identified separately if the ETP type code is different.

    You must not add the payments together and report the payments as a year-to-date figure unless they are paid on the same day and are the same type.

    Once you’ve reported an amount, you should continue to report the amount in all following pay events, even if the year-to-date amounts remain the same.

    Death benefit ETP

    If you pay a death benefit ETP, you have the option to report this payment through STP. If you do so, and make a finalisation declaration in relation to this payment, you will be exempt from providing a payment summary and payment summary annual report.

    The estate beneficiary TFN should be reported if the employer has been given the details. This could either be an individual TFN where the beneficiary is a dependant or non-dependant or the estate TFN when paid to a trustee.

    If you pay more than one ETP to the same beneficiary or estate in the same financial year, you must report each payment separately. You must not add the payments together and report the payments as year-to-date figures.

    Lump sum D

    If the employee’s only income for the financial year is a Lump sum D income then no tax should be withheld and the payments do not need to be reported to us

    However, you may choose to include these payments and we will accept them.

    Lump sum E

    If you make a Lump sum E payment you must issue the employee with a letter specifying the financial years over which the amount accrued and the gross amount that accrued each financial year. This is as per current requirements and has not changed as a result of STP.

    Allowances

    Not all allowances paid to employees are separately itemised as some allowances that are non-deductible form part of the gross payments.

    What is changing under STP is that where the allowance is required to be separately itemised (deductible), they will need to be categorised in one of the following categories:

    • travel
    • car
    • meals
    • laundry
    • transport
    • other.

    Employees will be able to see their allowances in ATO online services, accessed through myGov. The ATO will pre-fill these amounts into the employee's individual tax return once the employee's STP information has been finalised.

    Foreign employment income

    The classification of payments made to employees working in foreign countries depends on a number of factors, such as the time in the foreign country and the applicable tax treaties.

    These rules detail how you can report and adjust these payments through STP.

    You can use one or a combination of three models to report:

    Estimates

    If you believe the employee will remain overseas for the qualifying period, treat that employee as earning foreign income from the beginning.

    • If the employee’s status changes, adjust the employee's year-to-date figures accordingly. For example, your employee is working overseas for a year and the payments are subject to withholding in that country. Apply the withholding rate for that country from the beginning.

    Actual

    Treat the employee as earning foreign income from the time they qualify for withholding in the foreign country.

    Reconciliation

    Treat that employee as an employee working in Australia for the financial year and then reconcile the payments and withholding at the end of the financial year.

    How to report foreign employment income

    Foreign employment income is reported as follows:

    • Payments to an employee posted to a foreign country should be reported as foreign employment income if amounts are withheld in that country.
    • If no amounts are withheld for the foreign country then payments should be reported as individual non-business payment types.
    • If the employee is posted to the joint petroleum development area (JPDA) then the amounts must be reported as JPDA foreign employment income.
    • The employer should follow the accounting for foreign tax instructions.

    You must report payments made to employees posted overseas throughout the year and make adjustments as required. These adjustments can be reported in either a pay event or update event. The adjustments can be done throughout the year or at the end as part of the finalisation process.

    See also:

    Exempt foreign employment income

    The following information needs to be reported for exempt foreign employment income:

    • If the employee’s only income for the financial year is exempt foreign employment then no tax should be withheld. You don’t need to report these payments through STP.
    • Where the employee returns to Australia earlier than expected, the employer needs to start reporting the employee in the next pay event or an update event.

    Where the employee has another payment type to be reported as well as exempt foreign employment income, then the employer must report throughout the year and make adjustments as required. These adjustments can be reported in either a pay or update event. The adjustments can be done throughout the year or at the end as part of the finalisation process.

    Reportable fringe benefit amounts and reportable employer superannuation contributions

    You can report an employee's reportable fringe benefit amount (RFBA) or a reportable employer superannuation contribution (RESC) through STP.

    You only report RFBA amounts if the total taxable value of certain fringe benefits you provided to your employee exceeds $2,000 for the fringe benefits tax year (1 April to 31 March).

    The following information needs to be reported for RFBA or RESC:

    • You may provide year-to-date RFBA and RESC through a pay event (if the information is available in payroll) throughout the financial year.
    • You may provide year-to-date RFBA and RESC through an update event throughout the financial year.
    • Once you’ve reported an amount, you should continue to report the amount in all following pay events, even if the year-to-date amounts remain the same.
    • You may report these amounts through an update event. This can be at any time up until the due date to make the declaration that you have finalised your reporting for that employee for the financial year.
    • If you cannot (or choose not to) provide RFBA or RESC through STP, you must provide this information on a payment summary and provide us with a payment summary annual report. The payment summary must not include amounts reported through STP.

    Commencing and ceasing employment

    If you record your new employee’s start date in your payroll software, you must report it in your pay event.

    If you rehire an employee using the same payroll identifier, you can report the rehire date as the employee's start date.

    If you terminate an employee's employment and then rehire them using the same payroll identifier under a different ABN or branch within your group in the same regular pay cycle, the rehire start date should not be reported.

    Reporting employee withholding information

    You can report the TFN declaration and/or withholding declaration information through your pay event, if this function is enabled by your software. You may continue to use your existing channels such as paper and portals to lodge these forms if you are unable to do so through your payroll software.

    • Include the information your employee provides to you in a Tax file number declaration and/or Withholding declaration.
    • For new forms, include the details of your employee’s (payee) declaration that it is true and correct when reporting through the pay event.
    • Report the details of the new form(s) in the STP pay event within 14 days of receiving form(s).
    • If your employee is not paid within 14 days of the employer receiving the form(s), you can provide it in the next pay day for that employee.
    • If we are unable to match the identity of the employee with an ATO record, we will follow the existing process to send correspondence to you and your employee. Identity matching errors will not be sent via digital return messaging.

    Ceasing employment

    If you record an employee’s cessation date, you must report that date in a pay event report:

    • If you make another payment to that employee (for example an ETP), you do not need to update the cessation date.
    • If you rehire that employee using the same payroll identifier do not report their prior cessation date again, even if you rehire them under a different ABN /branch within the same group.
    Last modified: 04 Jun 2018QC 54550