If your business is not superannuation guarantee compliant, expect to hear from the ATO
All employers are now required to send the Australian Tax Office (ATO) continuous information relative to each pay period using a Single Touch Payroll (STP) system –- rather than, as previously, submitting an annual summary – and any who have been lax in meeting their superannuation guarantee (SG) obligations can expect soon to hear from the Australian Tax Office (ATO).
The ATO now has more timely, expansive and robust data on who is and who isn’t SG compliant and is instituting a letter campaign to remind non-compliers not only of their obligations but the penalties they face.
The background story
From 1July 2018 STP applied only to employers of 20 or more people, but the legislation has been extended to apply to all employers.
Generally the deadline for installation of a viable ATP system was 30 September this year.
Anyone who felt they were unable to meet this deadline for constant reports to the ATO of employees’ salaries and wages together with pay as you go (PAYG) withholding and superannuation information, needed to lodge a form available from the ATO requesting a deferral.
Large employers of 20 or more people will now be reporting to the ATO using STP available through most payroll, accounting and business management software. The period of grace allowed employers in this category to transition to STP without penalty ended on 30 June.
If not with such software, then with software solutions available for $10 (or less) a month, small employers (5-19 employees) will need to have started reporting to the ATO by the end-of-September deadline.
If you’re categorised as a micro employer (employing one to five people) you have additional options including use in some circumstances of free software. You’re not of course excused from existing obligations (regarding SG for example) but you can continue reporting quarterly to the ATO through a registered tax or BAS agent until 30 June 2021.
If you’re unsure whether software you’re using is STP-compliant or don’t know whether STP applied to you in the 2018-19 financial year, then do a head count, not just of full time employees but to see whether or not you employed 20 or more people during that time.
Macks Advisory understands the ATO is already contacting employers who are not reporting by STP.
Win-win aspects of the new regime
However it’s also our understanding the ATO may not be penalising employers for mistakes or late reports for 12 months and are willing to provide exemptions for STP reporting for employers experiencing hardship or where they are in areas with intermittent or zero internet connection.
The ATO acknowledges the change to real-time digital reporting may be challenging for some employers, especially those operating small businesses, and it’s therefore expected tax officers will be flexible, reasonable and pragmatic in aiding them to transition to the new regime.
The letter campaign will however reinforce the ATO’s resolve to ensure employers meet their tax obligations not only to employees but all other law abiding taxpayers.
STP already appears to be mutually beneficial. As well as providing a data bank that will help the ATO fulfil its function, many employers in small businesses who have already begun STP reporting, tell us it makes payroll reporting easier. It can be accomplished in a few minutes with software maintained by a supplier. Employers say the necessary changes required have tended to encourage them to become more conscious of what they should be doing to improve across-the-board functionally in a digital age.
The new legislation also ensures all employees are now more likely than ever to receive their full superannuation entitlements, and it will tend to force businesses to perform on a level playing field. In future it will be much harder for unscrupulous business operators to underpay staff and deprive them of entitlements in order to gain competitive advantage over honest operators.
Because there are circumstances where directors can be held personally liable for tax debts, Macks Advisory expects many would welcome the ATO’s letter campaign as a prompt to ensure their company is up to date with its tax obligations.