Single Touch Payroll - the ATO's new 'super power'
Written by Auxilium Partners
Since the introduction of Single Touch Payroll on 1 July 2018, the ATO has an unprecedented level of visibility of payroll and superannuation information and it’s not afraid to wield its powers to catch out non-compliant employers.
Single Touch Payroll
Single Touch Payroll, or STP, is a government initiative designed to streamline business reporting obligations. Employers are now required to report wages and salaries, pay as you go (PAYG) withholding and superannuation guarantee (SG) liability at the same time as they pay their employees through STP-enabled payroll software.
The new system initially launched for employers with 20 or more employees on 1 July 2018, extending to all employers on 1 July 2019.
Registering for STP
The ATO has noted that they will take a ‘flexible, reasonable and pragmatic approach’ to the implementation of STP by small businesses providing extensions of time to implement STP or lodge reports:
- They will offer micro employers (1-4 employees) help to transition to STP and provide a number of alternative options such as reporting quarterly through their registered tax or BAS agent for the first 2 years rather than each pay run;
- There will be no penalties for mistakes, missed or late reports for the first year to 30 June 2020;
- They may provide exemptions from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.
Impact of STP on Employers
The ATO now simultaneously collects data from superannuation funds to match payments received against the reported STP data, enhancing the ATO’s ability to identify non-paying employers. ATO’s new “Super” power means that employers will no longer be able to “hide” their SG liability debts from the ATO by failing to lodge their quarterly statements.
The ATO is starting to actively use the data received from STP to warn employers who appear not to be paying the required SG on time, in full or at all, that they should now “change their behaviour”. In October 2019, the ATO noted that 2,500 employers were being contacted regarding late payments and a further 4,000 employers were to receive due-date reminders.
In addition, over the first three quarters of 2018-19, the ATO examined around 75 million payment transactions across 400,000 employers. As a direct result of its compliance activities last year, the ATO contacted 22,000 employers and raised assessments for $805 million in outstanding superannuation. It has also issued 5,000 individual Director Penalty Notices for 3,600 companies to a combined value of $283 million.
The penalties for not paying SG on time are a significant financial burden for already distressed businesses, comprising several tranches of penalties, administration costs and interest. In addition, a director of a company can be made personally liable for the Company’s unpaid income tax withholding (PAYG or ITW), GST and SGC. If you have received a Director Penalty Notice (DPN), you must act immediately to minimize your personal liability to the ATO.
Further information
If you have received an ATO notification or have concerns whether you have complied with your payroll obligations, you are invited to contact Auxilium Partners on (08)9480 0619 or visit their website www.auxiliumpartners.com.au to book an obligation free discussion regarding your options.
About Auxilium Partners
Auxilium Partners was established in March 2015, by two highly respected accounting and insolvency professionals, Bob Jacobs and Paul Cockburn. The firm is founded on the principle of client-focused service without the distraction of corporate bureaucracy.
Disclaimer: This publication is not legal or tax advice. You should seek professional advice before taking any action based on its contents. Liability limited by a scheme approved under Professional Standards legislation.
