With reported unpreparedness for Single Touch Payroll (STP), mainly among small businesses, and with employers having less than 19 employees needing to report their employees' tax and super information through STP from 1 July 2019, the ATO has reminded businesses about the STP exemptions and deferrals that are available.
Under STP, there are exemptions for reporting:
- through STP for a particular financial year, or certain payments – for example:
- insolvency practitioners for an employer that is required to report through STP won't be required to report through STP on their behalf in 2018-19. However, they will need to start reporting through STP from 1 July 2019;
- employers in certain industries, such as building, construction, or cleaning, may make regular contributions to a long service leave or redundancy scheme for their employees. Those employees, who are members of the scheme, may then be entitled to a payment of long service leave or termination of payment if certain conditions are met. The ATO says administrators of one of these schemes who don't use STP-enabled payroll software to manage payments to members are exempt from reporting those payments through STP for the 2018-19 and 2019-20 financial years. However, they will need to start reporting these payments through STP from 1 July 2020.
- certain employees through STP – for example:
- employers will be exempt from reporting payments to foreign employees for the 2018-19 financial year if all of the following apply: (i) the employee is employed by an offshore entity eg an entity that is non-resident for Australian taxation purposes; (ii) the employee is seconded to Australia; (iii) all or part of the employee's base salary and other remuneration is paid by an offshore entity; (iv) the employer maintains a shadow payroll arrangement for the employee eg a notional payroll for the purposes of tax and social security obligations and internal tax equalisation and protection policies.
For employers with 20 or more employees, their software provider may have applied to the ATO for a later start date for STP reporting, which covers them as an existing client. Employers covered by their software provider's deferral will need to start reporting on or before the deferral date. The software provider will provide the employer with this date and a deferral reference number (DRN), verifying that they have a deferral for the employer. Employers must retain the DRN for their own records.
Employers unable to start reporting by their software provider's deferral date will need to apply for their own deferral.
If employers with 19 or less employees currently use payroll software that offers STP reporting, they can update their product and start reporting at any time up to 30 September 2019. If an employer knows they won't be able to start before 30 September 2019, they, or their registered agent, can ask the ATO for a deferral. To do this, they need to:
- log in to the Business Portal; and
- select Manage employees, then click on STP deferrals and exemptions.
Agents must be a registered tax or BAS agent to report through STP for their clients.
Payroll services include processing payroll on behalf of the employer, or performing any payroll related functions that involve interpreting legislation and helping employers calculate their PAYG withholding and super guarantee liability.
For deferral requests, where one of an agent's employer clients will not be ready to report, the agent can apply through:
- Tax or BAS Agent Portal – select Client's employer obligations, then STP deferrals or exemptions;
- Online services for agents – select Business, then STP deferrals and exemptions.
For employer clients with 19 or fewer employees, in most cases, the agent will receive a response in real-time. If the ATO needs more information, it will let the agent know. For employer clients with 20 or more employees, the agent will need to provide supporting evidence to help the ATO understand their circumstances through a portal mail message.
Where there are extenuating circumstances that impact an employer's ability to regularly report on or before pay day (eg regular intermittent internet connectivity issues that result in the ATO receiving its report a couple of days after pay day), they can apply for a recurring deferral.