• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / SMSFs / SMSF administration

Single touch payroll (STP): What are the implications for SMSF trustees?

August 1, 2019 by Alexandra Cain Leave a Comment

Reading time: 4 minutes

On this page

  • SMSF obligations?
  • Vast majority exempt
  • Technology to comply with the new regime
  • Mistakes and how they could be avoided
  • Comply as normal

Single touch payroll (STP) reporting is a streamlined way for employers to provide the Australian Taxation Office (ATO) with payroll information, that is, pay as you go (PAYG) withholding and superannuation guarantee information.

The STP reporting regime was introduced as an integrity measure to hold employers accountable and provide employees with more transparency over their salary and reportable superannuation and fringe benefit entitlements.

As Kimberley Noah, a lawyer with DBA Lawyers explains, Section 389–5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (TAA) details the amounts that the ATO must be notified of, on the day the relevant amount is withheld or paid. “These amounts broadly comprise salary or wages, ordinary time earnings and PAYG withholdings.”

SMSF obligations?

Noah says it’s important to note that under previous provisions, certain superannuation benefits such as some pensions have received a similar treatment as salary and wages for PAYG and reporting purposes. “This poses the question of whether the STP obligations extend to SMSF trustees in relation to pensions payable to those under 60 years.”

Fortunately, she explains, STP reporting is not directly imposed on SMSF trustees. A careful review of the legislative provisions, that is, Schedule 1 of the TAA, reveals that the STP obligation does not extend to SMSF trustees in relation to paying superannuation benefits.

“Rather, the STP reporting framework operates as an employer obligation and, accordingly, STP reporting obligations will only arise for SMSF trustees if they have employees.”


Advertisement
SuperGuide Premium is ad-free

It’s important to note that employer superannuation contributions made to SMSFs will be tracked via STP.

Vast majority exempt

Lyn Formica, Head of SMSF Technical and Education Services at SMSF administrators Heffron, agrees that fortunately, the vast majority of SMSFs are not subject to single touch payroll.

“The single touch payroll system imposes reporting obligations on employers. An SMSF trustee would not have a reporting obligation under single touch payroll unless it had one or more employees. It is extremely rare for an SMSF to have employees.

She says this is the case even where the SMSF is making payments to members (eg pension payments and lump sum payments). “Historically these sorts of payments have been reported in a similar fashion to an employee’s salary or wages, via a payment summary. While the reporting of an employee’s salary or wages has moved or will, in time, move across to the single touch payroll system, the reporting of payments from superannuation funds has not.”

Technology to comply with the new regime

To meet their STP obligations, employers must use standard business reporting (SBR) enabled software that is STP ready to report the PAYG withholding and superannuation information to the ATO.

“This software allows this data to be reported at the same time that the relevant employee is paid. That is, the data relating to the employee’s salary and wages, PAYG withholding and superannuation information is reported to the ATO in real time at the time the employee is paid,” Noah explains.

Compare super funds

Read more...

Advertisement

The ATO has provided a register on its website of no-cost and low-cost STP solutions.

Formica says as SMSFs are not generally subject to single touch payroll, they won’t usually need to make any specific technology changes.

“However, as a consequence of single touch payroll, some SMSFs may find that they’ll need to start receiving contribution payments and information via SuperStream.”

SuperStream is an electronic system enabling superannuation payments and data to be transferred between employers and super funds.

“For employers who are related parties of an SMSF, for example, the employer entity is controlled by the fund members, it is not compulsory that they use SuperStream. A simple cheque in the mail is still possible. However, those employers may find it easier to use SuperStream to make their contributions once they kick into the single touch payroll system,” Formica adds.

SuperStream necessitates the SMSF having an electronic service address or ESA. “Most of the large super software systems provide ESAs as do the large banks and fund managers and Australia Post,” she says.

Advertisement

Mistakes and how they could be avoided

STP obligations will only arise for SMSF trustees if they have employees and only a few SMSFs have employees that are paid salary and wages. If an SMSF does have employees, the trustee will need to comply with the STP obligations.

“Mistakes can arise if the right software for STP is not used. Mistakes can be minimised by ensuring the right software is used and tested,” Noah advises.

Additionally, she says it’s important to note that the ATO has provided a number of concessions over the following months as people become used to the new regime.

“In particular, the ATO has stated it will provide assistance to micro-employers, so those with between one and four employees, stating that if they rely on a registered tax or BAS agent, they may report quarterly for the first two years of the STP, so until 30 June 2021, rather than each time payroll is run. Some micro employers may be paying weekly or fortnightly and therefore this concession may be attractive to micro employers,” she adds.

The ATO has also said that small employers with 19 or fewer employees can start using the STP reporting regime from 1 July to 30 September 2019, with deferrals granted to those who have requested additional time.

Comply as normal

According to Formica, the most important thing for SMSF trustees to remember is that they still need to comply with their normal PAYG withholding and reporting requirements. “These requirements mean an annual payment summary still needs to be issued where the fund makes some payments.”


Advertisement

These include those to a recipient who is under age 60 and the pension payment or lump sum includes a taxable component. It also includes someone who is aged 60 or over, or under age 60 but receiving a reversionary pension and the deceased died age 60 or over, and the payments they are receiving are from a capped defined benefit income stream.

This includes:

  • Lifetime pensions regardless of when they started and lifetime annuities,
  • life expectancy pensions and annuities,
  • and market linked pensions commenced before 1 July 2017.

Other people in this category include:

  • People who are a non-dependant who are paid a lump sum death benefit with a taxable component,
  • as well as someone who is a dependant who is paid a pension with a taxable component following the death of a member and both the recipient and the deceased are under age 60.

As this shows, although few SMSFs are caught by the STP rules, there are complexities for those who are, and it pays to be on top of them.

Want to learn more about running an SMSF?

Become a SuperGuide Premium member and access expert guides for SMSFs, on topics such as costs, compliance, administration, investment, borrowing and pensions. Discover valuable super and retirement strategies, the most popular shares, managed funds and ETFs for SMSFs, the latest super rates and thresholds, contributions caps and more.

Includes more than 500 articles, how-to guides, checklists, tips, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about SMSF administration in the following SuperGuide articles:

Your SMSF calendar

January 4, 2021

What you need to know about six member SMSFs

December 1, 2020

SMSF trustee housekeeping checklist for 2020/21

June 29, 2020

Guide to the ATO SMSF supervisory levy

June 1, 2020

The SMSF trustee declaration explained

June 1, 2020

Guide to SMSF trust deeds

June 1, 2020

SMSF annual admin checklist

April 22, 2020

Top 5 mistakes SMSF trustees make with their annual returns

April 22, 2020

Guide to SMSF administration, reporting and record-keeping

January 1, 2020

SMSFs: What advice can your accountant provide?

December 14, 2019

How to wind up an SMSF

December 4, 2019

How to record SMSF minutes

November 3, 2019

Guide to SMSF audits

June 14, 2019

Real DIY super: Ways that SMSFs can be ultra low-cost

May 2, 2019

Estate planning, super and SMSFs: Getting your house in order

February 11, 2019

Related topics

SMSF administration SMSFs

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Join SuperGuide Premium and give your retirement plans a boost.

Get access to independent expert commentary on the latest super, retirement and SMSF issues, including the top performing super and pension funds, how much super is enough, the latest super rates and thresholds and new super measures and strategies.

You’ll have access to more than 500 articles, how-to super guides, checklists, tips, calculators, reckoners and other tools, as well as a monthly newsletter.

Find out more

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap