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Single Touch Payroll is a requirement for all Australian business with over 20 employees from July 1st, 2018. For businesses with less than 20 employees, the commencement date is July 1st, 2019. You will need to ensure that your business reports to the ATO the wage, tax, and super details of every employee payment made.

The requirement for substantial employers (those will over 20 employees) has now been made law. This means that failure to report these wage, tax, and super details of each employee payment to the ATO will result in penalties.

Failure to Report – Penalties

The ATO has allowed the first 12 months after the commencement of the official roll-out to be a ‘transition phase’. This means that until July 1st, 2019, businesses will be pardoned from an administrative penalty when they do not report the required details in a timely manner.

However, even within the administrative phase, the Australian Taxation Office can issue written notices to let a business know that they have failed to report on time. Businesses that receive this notice will be penalised if they fail to rectify the situation.

After the first 12 months – or after a written notice – Single Touch Payroll allows the ATO to penalise non-compliant businesses quicker than ever before. Because the ATO will have real-time access to payroll details, they can easily determine if an employer is paying their staff in accordance with the relevant industry award. This is particularly important for super contributions. It was reported at the end of 2017 that Australian employers had underpaid employees at least $17billion in super contributions over 8 years. Failure to pay the required 9.5% of earnings into super will result in mammoth penalties from the ATO. The introduction of the Vulnerable Workers Act last year increased award non-compliance and incorrect record-keeping fines to as high as $630,000.

Exemptions to Single Touch Payroll requirements

There are a few select circumstances that will allow the Australian Taxation Office to pardon a business from Single Touch Reporting. A business won’t be required to update their payroll reporting if:

  • They are based in a totally rural area with no guaranteed or reliable connection to internet
  • They are classed as a ‘substantial employer’ for only a very small period annually – harvesting businesses, for example, may classify here

These are the only cases for Single Touch Payroll exemption. The ATO will need to be contacted to validate your circumstance. Any other business not reporting their wage, tax, and super details at every pay event will be penalised. If you are classified as exempt from Single Touch Payroll reporting, you are still required to:

  • Report your PAYG annually to the Commissioner of Taxation
  • Provide PAYG summaries to employees

Deferrals to the Commencement Date of Single Touch Payroll

There a few select circumstances in which businesses can defer the roll-out date for Single Touch Payroll reporting. These are:

  • Your business is working with your payroll provider to update your solution, but the update may take longer than required. Contact with the ATO is required to see if this applies to your business
  • Your business has declared administration/liquidation
  • Your business has recently been affected by a natural disaster
  • Your business has been impacted by a situation out of your control

If you think your business requires a deferral, you must contact the Australian Taxation Office right away. Disorganisation will not be accepted as a reason for deferral – be sure to implement a Single Touch Payroll ready solution today to avoid penalties. Find out more about Single Touch Payroll ready solutions for your business here.