Single Touch Payroll and Superannuation Amnesty: What it means for your business
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The final step in the Single Touch Payroll (“STP”) reform commenced on 1 October 2019 after which businesses of all size must use the STP system.
Penalties for non-use by smaller businesses (less than 20 employees) will be waived until 1 July 2020, however penalties for non-use of STP by businesses with more than 20 employees have already come into effect from 1 July 2019.
Currently the Australian Taxation Office (“ATO”) is not issuing penalties for incorrect use of STP during the first year of the program, however ATO will know exactly which employers are engaging with the system and are likely to be more proactive in making direct contact with employers with respect to their superannuation and payroll obligations.
In addition to the implementation of the STP, the proposed extension to the superannuation amnesty and its associated legislation is also under consideration by the Parliament. The original superannuation amnesty period ended in May 2019.
The superannuation amnesty provides for a one-off amnesty to encourage employers to self-correct historical non-compliance dating from 1 July 1992 to the quarter starting on 1 January 2018.
While the bill for extension to the superannuation amnesty is under discussion in the Parliament, ATO will continue to apply existing law which provides employers a short window of opportunity to rectify any past underpayments. Interest would still be payable on the outstanding superannuation however if the amnesty is not availed by the employers, they will face a minimum of 100 percent penalty in addition to their outstanding superannuation liability and interest.
The implementation of STP and superannuation amnesty comes after the reduced reporting time for superannuation under the Director Penalty Notice (“DPN”) regime came into effect through the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018.
From 1 April 2019, the timeframe for employers to report their superannuation has been changed from three months to 28 days after the end of the relevant quarter.
The STP will provide the ATO unprecedented access to company data allowing the ATO to identify individual employers who have not met their payroll and superannuation obligations.
Introduction of STP, superannuation amnesty and reduced reporting period indicate an integrated enforcement approach by the ATO and a clear message to employers that the ATO is focused on ensuring compliance by employers when it comes to their payroll and superannuation obligations.
It is therefore important that directors proactively rectify any non-compliance with respect to their payroll and superannuation obligations. Proactive and upfront communication with the ATO may assist in addressing the issues in a timely fashion before they become a bigger and potentially fatal problem for the business.
The team at Collins Wentworth are experienced in business financial matters. If you have concerns about the financial position of your business and wish to know more about how we can assist you, contact us today.
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