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ATO outlines penalties for STP failures

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ATO outlines penalties for STP failures

ATO

Employers with 20 or more workers are now past their 12-month introductory period for Single Touch Payroll, with the ATO outlining what and how penalties will apply for late or missed reports.

The ATO has repeated its previous position that no penalties would apply for the first 12 months of Single Touch Payroll (STP), which took effect for larger employers from 1 July 2018 and has now been rolled out to smaller employers (those with 19 or less employees) from 1 July 2019.

“We can advise that over 107,000 small businesses have already commenced to report through STP as at 30 June 2019,” a spokesperson told My Business’ sister publication, Accountants Daily.

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However, with the 12-month waiver on penalties now over for larger employers, the Tax Office has clarified what these penalties will look like and how they will be applied.

“There are penalties for late or missed STP reports, although the ATO would generally only apply these penalties where an employer is routinely and repeatedly late,” the spokesperson said.

“The penalty is calculated at the rate of $210 for each 28 days or part thereof that the Single Touch Payroll report(s) is/are overdue (to a maximum of $1,050).

“This penalty increases to a maximum of $2,100 for medium entities, $5,250 for large entities and $525,000 for significant global entities.”

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Such penalties would “generally” only apply where the employer has not rectified the error “within a reasonable time frame”, the ATO suggested.

“The STP law allows for the commissioner to provide a period of grace for an employer to correct a mistake without penalty; as such, we would generally only apply penalty where an employer knowingly reports incorrect information and does not correct it within a reasonable time frame — usually that period is 14 days.”

There will also be fines for lodging false or misleading reports, the spokesperson confirmed.

The clarification around penalties comes amid revelations that thousands of larger employers – potentially even government agencies – were yet to begin STP reporting ahead of June 30.

According to the Tax Office’s spokesperson, its focus remains on assisting smaller businesses to become STP compliant, reiterating that these employers will not face penalties for mistakes or missed lodgements over the next 12 months.

Small and micro businesses are legally required to begin reporting their payroll and superannuation information via the STP system from Monday, 1 July 2019, although there is a three-month grace period through to 30 September.

There is also a 12-month waiver for closely held employees, including immediate family members.

Despite these extensions, accountants have suggested small businesses “rip the band-aid off” and begin their reporting as soon as they can, rather than leaving things to the last minute or taking a piecemeal approach according to different types of employees.

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For more information on STP, download the My Business Guide to Single Touch Payroll or check out the My Business Live webcast where tax experts answered business questions on the new reporting system.

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