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Not ready for the Single Touch Payroll deadline?

Single Touch Payroll (STP) is compliance. If you are not ready for STP reporting by the 1 July 2018 deadline, you will need to apply for an exemption or deferral from the Australian Taxation Office (ATO).

 

Single Touch Payroll exemptions

An STP exemption is where an employer is exempt from their STP reporting obligations. The exemption is generally for a full financial year; however, it can be open-ended. When an employer cannot report for part of a financial year this would be addressed by a deferral rather than an exemption.

 

Employers with seasonal workers

Employers with seasonal workers may be exempt from STP reporting if they had a temporary increase in the number of employees on their payroll to 20 or more on 1 April 2018.

To qualify for this exemption, both of the following circumstances must apply:

  • you had fewer than 20 employees for at least 10 months out of the preceding 12 months (that is, from 1 April 2017 to 31 March 2018)
  • you reasonably expect to have fewer than 20 employees for at least 10 months out of the 12 months immediately after 1 April 2018 (that is, from 1 April 2018 to 31 March 2019).

If you are a member of a wholly owned group, you will only be exempt if the whole group satisfies these two circumstances.

If you choose to use the exemption for seasonal workers, you don't need to tell the ATO. However, you should keep a record of your decision.

 

Applying for an exemption

You or your registered agent can apply for an exemption using the ATO Business Portal, Tax Agent Portal or BAS Agent Portal.

  1. Select General questions > Problems > Help as the message topic.
  2. Enter Single Touch Payroll as the message subject.
  3. Include the following information:
    • the number of employees on your payroll
    • the reasons why you are unable to report through STP
    • any steps you have taken to attempt to get ready for STP
    • any supporting evidence that may help the ATO understand your circumstances.

 

Single Touch Payroll deferrals

A deferral is a delay of time for an employer to submit their first pay event to the ATO. The report due date is moved to a future date (deferred date).

The ATO may grant a deferred start date if you are unable to get ready by 1 July 2018 due to extenuating circumstances.

Depending upon the circumstances, the deferral may be initiated by the payroll software provider or the employer.

 

Payroll software provider deferrals

Many payroll software providers have applied to the ATO for a deferral. These deferrals broadly stem from one of two reasons:

  • they are unable to meet the software development timeframes
  • their customers need additional time to prepare and implement the STP-enabled solution.

To lodge their deferral request, the payroll software provider must submit a suite of documents to the ATO to consider. This suite is called the Deferral Evidence Package (DEP) and includes:

  • a product list which outlines the software provider's payroll products, including description of the product function and capabilities, their update delivery model and intended market
  • a product roadmap which details the timeframes that their payroll products will be developed to be STP compliant and any products they are planning to retire
  • a transition plan or timeline covering an estimate of when clients will start STP reporting
  • a client-readiness strategy and roadmap that details the software provider communications plan to assist clients in adopting STP reporting.

The DEP information pack and submission form for payroll software providers to complete are available now via the ATO website.

Your payroll software provider should let you know if a deferral is granted for your software product and the deferred date. If you are unable get ready by then, you will need to apply for your own deferral in addition to this.

 

Employer deferrals

An employer may request additional time to start Single Touch Payroll reporting.

The ATO will consider employer deferrals if you:

  • have entered administration or liquidation
  • have been impacted by a natural disaster
  • are unable to get ready by your software provider's deferred start date
  • are transitioning to a new STP-enabled solution
  • are using a customised payroll solution and you need time to configure and test your updated product
  • have complex payroll arrangements and need additional time to transition to STP
  • are affected by other circumstances which are out of your control.

Employers requesting a deferral may need to provide to the ATO:

  • a profile of their business including number of employees and pay cycles
  • name(s) and version(s) of payroll software used
  • the circumstances preventing the commencement of STP reporting and steps taken to mitigate those circumstances
  • an STP implementation plan detailing when they will adopt STP, including key milestones and significant tasks
  • the requested deferred start date.

You or your registered agent can apply for an exemption using the ATO Business Portal, Tax Agent Portal or BAS Agent Portal.

The employer deferral request form – including specific instructions on how to lodge – is available now via the ATO website.

 

Existing obligations

If you are granted an exemption or deferral you must continue to comply with your existing PAYG withholding obligations including:

  • reporting and paying your PAYG withholding liability
  • giving payment summaries to your employees
  • giving a payment summary annual report to the ATO.

 

Penalties

The first 12 months of Single Touch Payroll reporting is a transition period. During this time employers are exempt from penalties for failing to report on time. This is unless the ATO gives you written notice advising that a failure to report on time in the future may attract a penalty.

 

More information regarding Exemptions and Deferrals can be found on the ATO website.