STP ....what SAP Australian customers need to know

^{An article by Paul Worland, Presence of IT}

First published on June 8, 2017 and reproduced here with the author’s permission.

Single Touch Payroll (STP) is the next big thing coming for all Australian employers.

So what is it? The official line from the ATO is:

"Single Touch Payroll is a government initiative to streamline business reporting obligations. When an employer pays their employees under Single Touch Payroll the payroll information will be sent to the ATO from their payroll solution."

This means that all data for your employees needs to be sent electronically to the ATO every pay period! This includes details such as gross pay, PAYG, SGC and basic employee details.

Scary stuff!

Below is a diagram showing the process as the ATO see it:

In Box 1 we have our usual payroll process: run pay, produce bank files, payslips, FI postings, etc.

Between Box 1 and 2 we have the SBR box: more on that in a moment. This is the STP process in your payroll system, transmitting to the ATO.

Box 2 is the ATO process, where they have received the information, and can then perform their own internal checks and matches. They then upload this data to Box 3, which is where employees (or citizens) can then see their own data via the mygov and mytax websites (which are good websites if you haven't tried it!).

What is interesting is the interfacing between Box 1 and 2, and the ability for information or queries to be sent from the ATO back to Employers. This will require an open communication channel between the ATO and your organisation, and it's something that will probably get your IT department interested....

What is SBR?

The government have a vision that organisations can communicate with the ATO and vice versa electronically. To facilitate this they have come up with SBR, or Standard Business Reporting.

It comprises of a number of objects, not least of which is the language (XBRL) and delivery method (ebMS3). However there has been issues with XBRL so the ATO are now introducing SBR2, which is using a new language, XML. SBR2 design however is still being finalised....

SBR is for more than STP however. It also is the delivery mechanism for any reports or information going to the ATO, including BAS and Superstream!

What's in it for me?

The benefits to businesses include the retirement of the current End of Financial Year process. No more last minute YTD reconciliations, no printing of payments summaries (assuming you're still doing that), no more ATO Mag tape (or Empdupe file, depending on what you like to call it)!

However, it does mean that this YTD reconciliation process will move to each pay period (once again, assuming your organisation isn't already doing this), to ensure everything is up to date for submission to the ATO.

Is this Superstream again?

Superstream was one of the initial payroll products delivered with SBR in mind. However none of the major software players (SAP, Oracle, Peoplesoft) could comply with the SBR requirements. This in part lead to the Superstream Alternate File Format (SAFF), which is what most if not all SAP clients are using.

The diagram shows below what most SAP clients are doing:

(Note the round circle in the middle represents a Clearing House)

Basically the Clearing house is doing the heavy lifting of converting the SAFF into the SBR requirements (XBRL and EBMS3) and sending into the Gateway, and managing any communications back to the employer from the super fund.

What is SAP doing about this?

The good news is that SAP are heavily involved in the STP design, and are on both the STP Advisory Group (as co-chair) and in the STP Design Working Group. The other good news is that the ATO run SAP for payroll themselves, so have a vested interest in getting this right.

The ATO are still finalising their specifications and technical designs, and this is expected soon. And as stated above, SBR2 is also still being finalised....

When is this happening?

For employers with greater than 20 employees the go live date is 1/7/2018. Note this is the latest date that employers can be compliant: you can go live before that date. This is pertinent for the cutover, as presumably organisations would want to go live for pay 01 for the year, which will most likely pre date 1/7.

However in a lot of ways this is just like Superstream all over again. The ATO aren't finished with their designs, and that won't leave Software developers with a lot of time to develop a solution, nor for their customers to then implement and test that solution. If I was a betting man I'd expect this to run the same way that Superstream did, and for the go live date to be delayed. Or, we may see an Alternate File Format option arise, same as Superstream, that will utilise the Clearing houses to perform the SBR work....but that may not come for free, and could cost employers!

Some questions that are still outstanding:

How do we do adjustments between the last pay period and 30/6?

One suggestion has been that any adjustments would be via ad hoc payments, which would involve producing an STP file for the adjustment. This is yet to be confirmed. This could be an issue for customers not using SAP Ad hoc processing.

What happens with any retro adjustments? Do we need to report them somehow to the ATO?

There could be a "Please explain" from the ATO on retros, depending on their magnitude.

What can customers do to prepare for STP?

Not much, given that we have no finalised design at this time for either STP or SBR2.

Keeping up to date with the news (here's a good website http://softwaredevelopers.ato.gov.au/STPupdate or http://service.sap.com/hrau) is about all we can do currently.

Paul Worland
SAP SuccessFactors HCM Account Manager
Presence of IT
https://www.linkedin.com/in/paul-worland-3b74061/