Employer obligations, accessorial liability, taxation legislation and superannuation guarantee (SG) non-compliance have received a lot of attention in the last few months – and we’re set to see a continuation of this theme across 2018. So what key changes do employers have to look out for?
“New Single Touch Payroll [STP] legislation along with other Federal Government initiatives such as MyGov and SuperStream, are momentous leaps forward in the Australian Government’s Digital by Default agenda,” says Eddie Megas, Acting Managing Director, ADP Australia and New Zealand, “Not since the introduction of PAYG in 2000 have we seen a piece of legislation with this impact for employers and employees.”
So let’s explore some of the big questions about STP.
Will your business be STP-ready by 1 July 2018?
From 1 July 2018, STP will be mandatory for all ‘substantial employers’ (those with 20 or more employees). Employers with 19 or fewer employees may be required to report through STP from July 2019, subject to the passage of legislation. All employers will need to do a headcount on 1 April 2018 to determine their obligation to report through STP.
How do employers benefit from STP?
There are a number of benefits available when you report your employer obligations through STP in a financial year, including:
How do employees benefit from STP?
- The obligation to provide employees and/or the ATO with payment summaries will be fulfilled through STP. This includes individual non-business, foreign employment income and employment termination payments (ETP) payment summaries.
- Activity statement compliance efficiencies will be obtained, such as:
- the removal of statistical labels from the activity statements for large withholders (gross wages and W1); and
- pre-fill of withholding related labels on monthly and/or quarterly activity statements
- The requirement for the employer to lodge a tax file number (TFN) declaration with the ATO will be removed.
- Validated employee data will be available to an employee through MyGov and to STP compliant solution providers.
- The STP report will be reported as year to date (YTD) balances and will allow employers to make adjustments (even for a prior payroll period) in future period reports. This feature potentially gives employers a lot of flexibility to correct errors and omissions in subsequent pay runs.
- The ATO will be able to recognise and deploy early assistance to employers struggling to meet their employer obligations.
The introduction of STP gives employees more control to monitor and actively manage their tax and superannuation balances including:
STP and Superbad – what’s the connection?
- When using MyGov, both the superannuation choice and TFN declaration can be completed on ATO online. In addition, the ATO will make available to the employee:
- a drop-down list of all the superannuation funds the employee has a balance/account with;
- the default fund(s) of the employer; and
- YTD payroll details, including superannuation balances and a consolidated view of all employers reporting for that employee.
- Using MyGov, an employee can view and manage their tax position; such as consolidate superannuation balances, apply for withholding variation if required, or correct TFN declaration details if necessary (i.e. claimed more than one tax free threshold).
- STP also relieves employees of having to be responsible for reporting non-payment of SG to the ATO.
The recent Senate Economics Committee’s review into SG non-compliance resulted in a report titled: Superbad – Wage theft and non-compliance of the Superannuation Guarantee. There were a total of 32 recommendations proposed by the Committee. Surprisingly, a significant number of the recommendations would involve legislation change and fairly fundamental changes to the way the SG system is currently administered.
A short while after the report, on 29 August 2017, the Government announced a further package of reforms to give the ATO near real-time visibility over SG compliance by employers. The media release from Hon Kelly O’Dwyer, Minister for Revenue and Financial Services, explained that STP will “reduce the regulatory burden on business and transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations”.
The package includes measures to:
A collaborative effort is required for change in 2018
- Ensure superannuation funds report contributions received more frequently, at least monthly, to the ATO. This will enable the ATO to identify non-compliance and take prompt action;
- Improve the effectiveness of the ATO’s recovery powers, including strengthening director penalty notices and use of security bonds for high-risk employers, to ensure that unpaid superannuation is better collected by the ATO and paid to employees’ super accounts; and
- Give the ATO the ability to seek court-ordered penalties in the most egregious cases of non-payment, including employers who are repeatedly caught but fail to pay superannuation guarantee liabilities.
- Provide the ATO with additional funding for a SG Taskforce to crackdown on employer non-compliance.
2018 will be bringing significant legislative changes for business to implement. The change management
effort required for new legislation compliance should not be underestimated – nor does it fall squarely on the shoulder of one group.
“As a payroll solutions provider, ADP recognises that we play an important role in helping our clients better understand their employer obligations,” says Megas,” We all need to address the issue of compliance collectively to achieve a fairer working environment for all.”
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