ATO confirms Single Touch Payroll concessions and quarterly reporting
Since Single Touch Payroll reporting became mandatory, it’s been unclear exactly how much wiggle room is available for very small businesses, seasonal operators and closely held payees – until now.
Single Touch Payroll (STP) represents one of the biggest changes to the way businesses reporting salary and wage payments to the ATO in recent times.
First mandated for businesses with 20 or more employees from 1 July 2018, STP was later expanded to include all employers, with small businesses expected to begin STP reporting between 1 July and 30 September this year.
But the introduction of STP hasn’t been without some teething issues, as businesses update their systems and processes to accommodate this change.
One of the biggest changes STP reporting brings is the fact that key employee data like wages and super are now to be reported with each pay run rather than annually.
Without a technological solution, collating, verifying and sending this information with this regularity would represent an enormous compliance burden for businesses and their payroll services providers.
Luckily, the likes of MYOB have been quick to bring their product offerings up to speed. But still a gap remains.
Quarterly STP reporting for micro-employers
For the smallest businesses, those employing between one and four employees, payroll has previously been a largely manual process.
The ATO recognised early that, without an STP-specific payroll solution designed for this end of the market, they would likely quickly slide into non-compliance.
It’s for this reason that MYOB has worked closely with the ATO to offer a low-cost payroll solution that meets these needs and those employers who have set themselves up with such a solution can rest easy knowing they can report STP in real time and in total compliance with the law.
But the ATO has gone one step further to make sure that all employers have the correct processes in place to begin reporting STP, even if they do have extenuating circumstances and haven’t been able to get set up on a payroll solution like MYOB Essentials Payroll.
For example, if you’re an employer of between one and four employees and need more time to get set up with STP, the ATO will officially allow you to report payroll data quarterly via a registered tax or BAS agent until 30 June 2021.
But what about those employers running seasonal operations or who only intermittently have staff? And what about those closely held payees, who employ staff members who aren’t ‘held at arm’s length’ such as family members in a family business?
Quarterly reporting for closely held payees and seasonal employers
There’s good news for these businesses and their payroll service providers as well.
The ATO has stated that small employers with 19 or less employees that include closely held payees are exempt from STP for the 2019-20 financial year.
But what are closely held payees? According to the ATO, they include family members of a family business, directors or shareholders of a company and beneficiaries of a trust.
For these employers, STP can be reported quarterly from 1 July 2020.
As for those businesses with seasonal or intermittent operations who see an increase in employees for less than three months of the year, there are also some concessions according to business size.
If, at a maximum, they employ 19 or fewer short-term employees, then there’s a concession automatically available by application via the business’s registered tax or BAS agent.
For those seasonal businesses who employ more than 19 short-term staff during peak periods, then the ATO is saying they will review their application (via registered agent) on a case-by-case basis.
Confused? Well, STP will make things simpler and it will eventually become an intrinsic part of the Australian tax reporting system – but that doesn’t mean employers are without option when it comes to how they wish to handle the transition.
For now, the most straightforward option remains taking up STP-compliant payroll software. But if you think you’re in line for a concession, or need to report quarterly instead, we recommend reviewing the relevant advice on the ATO’s website to clarify your position before discussing next steps with a registered tax or BAS agent.