The Australian Taxation Office will start reminding employers about whether they have a valid exemption for not rolling out single touch payroll (STP) phase two as thousand-dollar fines kick in at the end of the year.
Businesses without deferrals will be fined $210 for every 28 days an STP report is overdue, with a $1,050 penalty cap for small businesses, a $2,100 cap for medium entities and a $525,000 one for large and global entities.
The ATO said it would start writing to employers to let them know if “their digital service provider has a deferral but the product they use is ready, their product is ready and they are not covered by a deferral, the product they use is not being updated to support STP Phase 2 reporting.”
Digital service providers who were unable to upgrade their software to allow for the expanded reporting requirement of STP phase two by the 1 January 2022 deadline were granted deferrals, which also covered their employer customers.
Employers whose digital service providers do not have deferrals can also apply for deferrals, which are granted based on their individual circumstances.
“There won’t be penalties for genuine mistakes for the first year of Phase 2 reporting until 31 December 2022. This includes employers who have already started Phase 2 reporting,” the tax office’s website reads.
STP phase one became mandatory for all businesses on 1 July 2019: requiring employers to send ATO data on the income tax and superannuation payments made to employees every time they do a pay run.
The scheme helps ATO know which businesses are meeting their tax and super obligations, especially once it cross-references with employees’ tax returns.
Phase two expanded STP so businesses only report their employees’ information to one agency, and the data can be synchronised with Services Australia: making it easier for the agency to perform functions such as surveilling welfare recipients.
“Services Australia will streamline requests for you to provide or confirm employment and payroll information about your employees,” the ATO has said.
The tax office has said the expansion would remove red tape for employers such as allowing them to keep employees’ TFN declarations in employee records without reporting them to the ATO.
“You can tell us if you’re using concessional reporting options by reporting income types, such as for closely held payees or for inbound assignees.”
