Single touch payroll – the latest... | KPMG | AU

Single touch payroll – the latest...

Single touch payroll – the latest...

Hayley Lock provides a recap of the ATO seminar on the implementation of Single Touch Payroll, due to commence 1 July 2018.

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Partner, Employment Tax

KPMG Australia

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On 16 November, the Australian Taxation Office (ATO) hosted a seminar at which it updated the business community on progress towards the implementation of Single Touch Payroll (STP) on 1 July 2018. The seminar provided some useful practical guidance for employers.

The ATO currently expects that not all payroll software providers (and consequently their clients) will be completely STP-ready by the commencement date. Therefore it has established a process whereby the software provider can apply for a Deferral Reference Number (DRN). Provided the ATO is satisfied that the request meets certain criteria, it will issue a DRN to the software provider. The software provider would then make the DRN available to its clients, who would quote the DRN in advising the ATO of the delay in their commencement of operating STP.

The commencement date of 1 July 2018 applies to employer groups with 20 or more employees on the payroll, as of 1 April 2018. Therefore employers with fewer than 20 employees, but who are part of a wholly-owned group with more than 20 employees in aggregate, will have to meet STP requirements from this date. The Government’s intention is that from 1 July 2019 all employers should adopt STP, but this has not yet been legislated.

It appears that the ATO may exercise discretion in reducing potential penalties, where employers make genuine mistakes or experience technology hiccups during the first year of operation. However, the ATO has made it very clear that employers cannot outsource the legal obligation to calculate correctly, and appropriately remit, income tax and superannuation contributions for their employees. Therefore prior to go-live, all employers are encouraged to work closely with their payroll software providers to test the functionality in light of the employer’s specific payroll setup.

In time, we will expect that employers may receive a risk rating in relation to their payroll compliance, as they currently do for other elements of their tax affairs. The Government and the ATO see the opportunity for STP to deliver significant community benefits, and so once the bedding-down process is complete, we can expect that the real-time data that employers provide will be monitored very closely.

So, there is no room for complacency in the world of STP.

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