Single Touch Payroll (STP) came into effect this financial year for employers with 20 or more workers on their books (as of 1 April this year).
A bill regarding the extension of STP to smaller employers from 1 July 2019 is still being debated in parliament.
Yet there has been considerable confusion around who is and is not required to implement the new payroll reporting system, with a recent My Business poll suggesting as many as one in five business leaders are unaware of it altogether, much less prepared for its rollout.
In a bid to demystify the issue, the ATO issued a clarification on the types of businesses exempt from immediately implementing STP.
One of the biggest question marks was employers that employ casual workers during peak periods, which push their workforce to more than 20 in number.
“You will be exempt from reporting under STP for the 2018-19 financial year if both of the following circumstances apply,” the ATO said.
“You had fewer than 20 employees at any one time for at least 10 continuous months out of the preceding 12 months (that is, from 1 April 2017 to 31 March 2018) [and] you reasonably expect to have fewer than 20 employees at any one time for at least 10 continuous 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.”
The tax office said that such businesses are automatically exempt, meaning they do not need to apply or notify it, although it said proper records supporting this decision should be kept.
A number of conditions must be met in order for an employer to be exempt from reporting wage payments to foreign-based workers.
According to the ATO, these are:
- The employee is employed by an offshore entity, for example, an entity that is non-resident for Australian taxation purposes.
- The employee is seconded to Australia.
- All or part of the employee’s base salary and other remuneration is paid by an offshore entity.
- A shadow payroll arrangement for the employee is maintained, for example, a notional payroll for the purposes of tax and social security obligations and internal tax equalisation and protection policies.
All other workers not meeting these points will need to have their details reported to the ATO.
Withholder payment number (WPN) holders
“If you have a WPN because you are registered for PAYG withholding and are not entitled to an ABN, you are exempt from STP reporting for the 2018-19 financial year,” the ATO said.
“This is a class exemption. You do not need to apply or advise us if you use this exemption.”
Several specific operators also receive exemptions from STP reporting in the current financial year.
Insolvency practitioners are not required to report on behalf of their clients (but will need to do so for their own business if they have 20 or more employees), while payments to long service leave and redundancy schemes do not need to be reported.
More information on STP exemptions can be found on the ATO website.