Single Touch Payroll – Answers to your questions[ 15-Oct-2017 ]
At PwC’s recent national Payroll Managers Forum, attendees had the opportunity to ask their specific STP related questions directly to Michael Karavas, Director STP, ATO.Over 80 questions were gathered on the day and the ATO have provided answers which we will share with you over the coming weeks.
This week’s installment includes 10 questions and answers providing clarification on some practical elements of STP:
Q: How will the ATO deal with the scenario where a fortnightly payroll does not calculate super every cycle, but on a monthly basis? This is a timing issue only and quarterly obligations are still met.
A: Under STP, the employer is required to report the SG accrual and/or OTE at the time of each pay event.
Q: If superannuation is overpaid how does that get reported/amended through STP?
A: Payments of super are not reported in STP. If there has been a miscalculation, then the employer can either correct a past pay event, or put the correct YTD figure in the next pay event.
Q: Can you confirm that OTE is an optional field to report? If optional, and the employer doesn't report isn't that going to generate a lot of "please explain" queries re SG?
A: The employer has to report one or both of SG Accrual and OTE. If they only report SG accrual, then the ATO will not query the employer about that. If the employer does not report either OTE or SG accrual then it is likely they will be contacted by the ATO.
Q: Will there be a two way exchange between the ATO and the employer or is it only one way (employer to ATO)? If there is a 2 way data feed - when will more information be released on how this will work? Will the messages appear via the ATO portal?
A: Error messages identified through processing of the payroll event will be returned via SBR. The design process is still underway for additional messages the ATO will provide to employers after analysing the payroll event information. The design process will determine how other messages are provided to employers.
Q: Under what circumstances can software developers request an extension?
A: The ATO acknowledges there may be circumstances when an employer is unable to start reporting via Single Touch Payroll by 1 July 2018 and is developing a framework to support both digital service providers and their clients. We will work collaboratively with digital service providers and employers to ensure a flexible approach. Information on this framework is expected to be available in early October.
Q: Can we request an extension?
A: The ATO acknowledges there may be circumstances when an employer is unable to start reporting via Single Touch Payroll by 1 July 2018 and is collaboratively developing a framework with digital service providers and employers to ensure a flexible approach. Further information is expected to be available later this year.
Q: How do we apply and where do we send our request for the extension?
A: Pending finalisation of the deferral process, if an employer becomes aware that they will not be able to adopt reporting via STP by 1 July 2018, they should contact us on email@example.com
Q: For foreign employment I understand that we can adjust earnings at a later date. Is the current way in which we report ok or are there changes to obligations that we need to prepare for? E.g. do we need to look at adjustments being made throughout the year more regularly to comply?
A: Changes can be reported as they occur or through an end of financial year reconciliation process. The rules which will apply for foreign employment are: The employer will use one or a combination of three models to report:
1. Estimate: Employer assesses the employee at the beginning of placement (the employer must adjust at the end of year or when they are aware of a change of status or if the employee does not qualify).
2. Actual: Employer changes status when the qualifying rule is satisfied.
3. Reconciliation: Employer assesses status at the end of year. The business rules for foreign employment income are:
1. Payments to an employee posted to a foreign country should be reported as foreign employment income if amounts are withheld in that country.
a. If no amounts are withheld for the foreign country payments should be reported as individual gross payments and withholding.
b. If the employee is posted to the JPDA the amounts must be reported as JPDA foreign employment income.
c. The employer should follow the rules for accounting for foreign tax. The amount of PAYG withholding cannot be negative.
2. An employer may provide YTD foreign employment income amounts through a payroll event (if the classification of the payment is available in payroll), throughout the financial year.
3. An employer may provide YTD foreign employment income amounts through an update event, throughout the financial year.
4. If reported during the year via a payroll or an update event the amounts should continue to be reported for each following payroll event, even if the YTD amounts remain the same.
5. Alternatively, the employer may report these amounts as individual salary or wages throughout the year and adjust the classification to foreign employment income via an update event as a part of the finalization process at the end of the financial year before 14 July.
Q: Does the ATO have any documentation on the key pieces of information that will need to be transmitted, i.e. DOB etc. Would be good to know what “metadata” they are expecting to collect?
A: This information is available in the payroll event data definitions: https://softwaredevelopers.ato.gov.au/PayrollEventDataDefinitions
Q: Will we need to transfer all employee year to date earnings to the new system? Or can we perform a year end, produce an EMPDUPE file and lodge early? Will the earnings for our employees be added together in MyGov?
A: An employer may start STP reporting at any time throughout a financial year. Employers may transition into STP using one of the following methods.
a. An employer may provide an opening YTD balance for all employees (active/inactive and terminated) in an update event.
b. An employer may report all employees being paid and inactive/terminated employees YTD information in the first payroll event.
c. An employer may report YTD amounts for employees through a payroll event. YTD amounts for inactive/terminated employees may be reported in a later update event, which must be lodged by 14 July or the deferred due date.
d. An employer may report YTD amounts for all employees being paid in the first regular pay cycle, through a payroll event and provide a payment summary and payment summary annual report, for terminated and inactive employees.
e. An employer may begin STP reporting employee amounts, from zero in a payroll event and provide a payment summary and a payment summary annual report to the ATO, for prior amounts not reported through STP.
There are times when an employer, already STP reporting, changes their BMS during a financial year. The rules and scenarios outline how to transition from one BMS to another. The business rules for transition of BMS during a financial year are:
1. An employer may migrate YTD information to the new BMS and use the original BMS ID.
2. An employer may migrate YTD information to a new BMS and create a new BMS ID. That means they will need to zero the employee YTD values from the old BMS ID via an update event, to prevent duplicate information being displayed.
3. An employer that does not migrate YTD information to the new BMS is required to finalise employees reported under the original BMS. The new BMS must have a different BMS ID to the original BMS. This information sent from the BMS to the ATO, the employees YTD will be then visible in myGov and prefill their ITR.