The September 30 deadline has passed, but the ATO says there’s still time to get compliant with Single Touch Payroll.
Following legislation passed earlier this year, employers with 19 staff or less joined larger employers in being obligated to pay salaries and wages, pay as you go (PAYG) withholding, and superannuation information through the Australian Tax Office’s (ATO) Single Touch Payroll (STP) system.
John Shepherd, the former assistant commissioner of ATO, told HRM in March this year that the ATO had been working closely with Australia’s payroll software providers to “make this process as automated and hassle-free as possible for the HR industry”.
With the deadline of 30th of September well and truly in the dust, some employers still haven’t jumped on board, but the ATO is giving non-compliant organisations a bit of leeway.
Where STP is at
Addressing the PwC Payroll Managers Forum, James O’Halloran, deputy commissioner, superannuation and employer obligations at the ATO said over 540,000 employers in Australia are now using STP to report on 11.3 million employees. Given the longer lead time, 98 per cent of employers with over 20 staff are currently compliant with their STP obligations, but only 62 per cent of businesses with under 19 staff are.
“We can now see employers who aren’t paying their SG contributions or are making late payments. We have earlier visibility of under-reporting of PAYGW on activity statements. We have earlier visibility of employers dropping out of the system. We can also see large withholder payment patterns,” says O’Halloran.
He also said the ATO has started contacting non-compliant employers and is currently monitoring 780 “substantial employers” who aren’t using STP and are yet to apply for a deferral. Of these substantial employers, 133 have already been contacted, and an underpayment of $2.5 million and raised shortfall penalties of $0.5 million was discovered.
“We also identified $254 million applied to the incorrect EFT code, such as using EFT 60 instead of the correct EFT 70. The findings of this examination concluded that 59 substantial employers were paying with the incorrect EFT code (due to being new to this reporting requirement). Some substantial employers were paying monthly rather than on a required more regular cycle for withholding obligations, such as weekly,” says O’Halloran.
Steps you can take to be compliant
The ATO’s assistant commissioner Jason Lucchese says small employers who might be unsure where to start have three possible pathways. They can:
- start reporting now through an STP-enabled solution that is right for their business
- consider if they are eligible for a quarterly reporting concession, or
- apply for a deferral if they need more time.
“It’s really important for small employers to contact us if they have any concerns about their ability to transition to STP. You can also speak with your registered tax or BAS agent if you have one,” says Lucchese.
“We want the transition to STP to be simple and manageable for all employers, and no penalties will be applied in the 2019-20 financial year for small employers who make a genuine attempt to transition or for missed or late reports.”
Note the language “genuine attempt”. This financial year should not be treated as one where compliance can be ignored.
Still need more assistance?
The ATO has put together a quick 3 minute quiz to help you to understand your options around STP and find out if concessions are available to you. Plus, you can find out how other employers have made the transition to STP by viewing this series of videos.
With any legislation change, you may need to update your policies to ensure your employees are working within the legal requirements. AHRI’s short course ‘Develop and implement HR policies’ will set you on the right path.