From 1 July 2018, Single Touch Payroll (STP) will become mandatory for employers with more than 20 or more employees.
The ATO led initiative will see an improvement in the way wages, superannuation and PAYG taxes are monitored, encourage greater transparency, modernise payroll reporting and connect business to the ATO in real time through their accounting software.
Are You Ready?
STP compliance is mandatory unless you have received notice by your payroll software that you have been granted a deferral for all your employees or you have approached the ATO directly for a deferral.
If not, you will need to be ready to send payroll data to the ATO using STP reporting when you finalise your payroll after 1 July 2018.
First Super’s STP Solution is Free for Default Employers
First Super has been working with its clearing house to provide STP solution that will not only enable you to be compliant with the new tax obligations but is free of charge to our default employers.
To simplify how employers can submit STP reports to the ATO, we have replicated the process you currently use to upload your employees’ superannuation files to the employer protal, so that you can use a similar process to upload your STP file.
Our clearing house facility will take all the necessary steps to ensure you are compliant with your tax obiligations.
First Super’s STP Solution will be operational soon and successfully submitting STP reports to the ATO
If you have more than 20 employees and have not solved your STP solution or would like to find out more, call First Super on 1300 943 171 to register your interest.
A Service Centre Consultant will be in touch with you to discuss your needs and advise you of the next steps to take.
The ATO also has provided a step-by-step guide to help businesses prepare for STP. If unsure please visit ato.gov.au/stp
Super Changes in the Budget that May Affect You
With continuous alterations in previous Budgets being a source of frustration and confusion for the superannuation sector, the 2018/19 Budget continues to tinker with the system resulting in a number of changes of interest; particularly for younger members of the community.
The Government has announced three significant initiatives which will have an impact upon members if legislation enabling these initiatives passes.
Below is an initial briefing of changes and the expected effect the changes might have on members.
Inactive Accounts / Account Fees
Inactive superannuation fund members who have a balance of less than $6,000 will have their account balances transferred to the Australian Taxation Office. Inactive accounts are those that have not had a contribution in 13 months and members who become inactive will have their insurance cancelled once they are become inactive.
The ATO will then attempt to locate the member and transfer this money to their active superannuation account.
These members will lose their insurance and will receive lower earnings on this amount transferred as the ATO only pays the CPI on account balances. First Super members typically earn at least twice CPI.
Insurance Inside of Superannuation
New members will not be provided with insurance inside of superannuation until their account balance is greater than $6,000. At present they are provided with insurance which they can opt out of.
Insurance will also not be available to the following members unless the member opts in or passes a threshold
- New members under the age of 25
- All accounts with balances below $6,000
- All inactive accounts
Insurance in superannuation will move from default to an opt-in basis for members with balances below $6,000 for members under 25 years and with inactive accounts with no contributions in 13 months. These changes will take effect from 1 July 2019.
All other members will face an increase in the cost of their insurance as there will be fewer members insured. Preliminary estimates are 40% increases.
Members with account balances of less than $6,000 will have fees capped at 3%. This will save most members within this cohort money but some will pay more than they would if the fee is set at 3%.
Admin Costs as a result of Budget Changes
All other members will face an increase in administration costs due to the number of inactive members being transferred to the ATO and the 3% cap on fees for members with account balances of less than $6,000.
First Super’s Response
The effect of 3% fee cap will see administration costs for members with account balances of above $6,000 will increase. The magnitude of this increase is not known at this stage. Consolidation of inactive accounts will also result in an increase in administration costs.
Turning off insurance will detrimentally affect inactive members and will increase the cost for active members.
Further analysis will be undertaken by First Super and a press release will be circulated accordingly.