Single Touch Payroll for Software Providers

Single Touch Payroll is an initiative of the Australian Tax Office and it affects all payroll software developers and their clients.

The Law

The Federal Government has completed legislation called Single Touch Payroll which mandates that all employers must send payroll information to the ATO with every payrun. Businesses with 20 or more employees must meet the compliance date of 30th June 2018 but can begin sending data from 1st July 2017 onwards. All other businesses can begin sending data at any time but must be compliant by 1st July 2019 and e.

The Requirements

This requirement is data only – there is no requirement to pay employee withholding tax and superannuation any earlier than currently legislated. The data to be sent is year to date employee information which is similar to, but not the same as, payment summary information.

Data Format and Messaging Protocols

The data must be in the prescribed XML format – documentation of the format and data items has been released and can be found at the ATO website from December 2016.

The data in XML format must be submitted to the ATO using SBR2 messaging protocol; ie ebMS3.0 AS4. The data is enclosed in an AS4 message with message header and submitted using the ATO’s AS4 standards with AUSkey verification.

Transport to the ATO may be made in several ways:

  • Data is prepared and packaged locally by the employer using the Ozedi Connector (see below) on site and submitted directly to the ATO
  • Data is prepared and packaged locally and sent by the employer to Ozedi using the Ozedi Connector; Ozedi submits to the ATO and handles any service connection issues.
  • Data is sent to Ozedi by any transport protocol and transformation/AS4 packaging is performed at Ozedi prior to submission to the ATO

NB Ozedi is a fully certified SuperStream Gateway using AS4 technology and has passed the conformance tests for lodgement of SBR2 forms with the ATO.

AUSkey Verification

Access to the ATO requires AUSkey verification. Currently this is the client’s AUSkey or an authorised agent’s AUSkey. The ATO is releasing shortly a new third party relationship model which is messaging only. Ozedi can provide both a direct connect solution and a gateway solution when the new model is released.

Data Encryption

Significant concern has been raised by employers about sending all payroll data in text files across the Internet. Employers using Ozedi services can encrypt and sign their payroll data at their site. The AS4 message is sent from their system to Ozedi for on forwarding to the ATO and is:

  • Encrypted – for privacy
  • Signed – to prevent tampering with the data

NB this assumes the ATO will accept encrypted data. This is currently under discussion. 

What Ozedi Provides

Ozedi provides the Ozedi Connector free of charge to employers and their payroll provider in conjunction with the use of Ozedi services. It has the following facilities:

  • Encryption (optional, using S-MIME standards and the ATO’s public key)
  • Signing
  • Scripts to encrypt, sign and prepare AS4 message
  • AS4 client to send the message to Ozedi or the ATO directly

A payroll software provider only needs to export the payroll data in the ATO prescribed XML format or an Ozedi approved format (see below). Ozedi looks after the rest.

Data Transformation

Ozedi will provide data transformation from other formats (CSV,Excel) to the ATO XML standard format as part of the Ozedi Connector functions if required.

Test Environment

Ozedi provides a test environment from mid-April 2017 to enable payroll providers to test the Ozedi solution which will communicate with the ATO’s EVTE for STP which is scheduled to be available mid-April 2017.

Technical Assistance

Ozedi provides a Software Developers Kit plus technical assistance to payroll software providers to make the transition to STP as simple as possible.

As well as Single Touch Payroll

The Ozedi Connector is a single collection of products and services which will also work with

  • SBR2 including payment summaries for SBR2 (replacing the ECI solution)
  • E-invoicing through the Ozedi Access Point which has provisional accreditation from the Digital Business Council
  • The lowest cost SuperStream solution with our easy to use API