Tax regulation

The introduction of Single Touch Payroll Reporting (STPR) is the Australian Taxation Office’s first whole of economy big data initiative to collect real-time transaction and compliance information, creating significant changes for how businesses across the country report to and engage with regulators.

What is STPR?

As part of the Budget Savings (Omnibus) Act 2016, employers will soon be required to comply with the Australian Tax Office’s (ATO’s) STPR requirements which will see the ATO collect payroll data in real time, setting a new standard for payroll reporting in Australia.

Businesses with an employee head count of 20 or more will be required to adopt and align reporting processes from 1 July 2018. The mandatory reporting for businesses with less than 20 employees will apply from 1 July 2019.

Cross-agency sharing

The intention of STPR is to improve compliance by employers and transparency of information initially with the ATO, however, the real-time data will in due course be shared between other agencies. For example, instead of the ATO sharing payroll data with an agency such as Centrelink a year after the fact, the ATO will be able to share the data in real-time, allowing agencies to make decisions on benefits to the community much quicker than they have before.

Impact on superannuation payments

Superannuation payments will also be affected by the new STPR system and recent changes made to the reporting requirements for superannuation funds. For the first time, the ATO will be able to match an employee's superannuation fund payments to an employer’s obligations each quarter. There is also a recommendation that superannuation payments be moved from quarterly to monthly, although no decision has been made on this yet – so watch this space.

How are directors liable?

Any errors by employers using the STPR system are likely to drastically increase the chances of an ATO audit or review.

It is important directors understand their solvency triggers and are across the payroll activities of the business to protect their personal liability.

Directors of a company that fail to meet Pay As You Go (PAYG) withholding or Superannuation Guarantee Charge (SGC) liability by the due date may become personally liable for a penalty equal to the unpaid amount.

Directors may be issued with a director penalty notice (DPN) by the Commissioner of Taxation in respect of a penalty which is equal to your company’s unpaid liabilities.

If appropriate action isn’t undertaken within 21 days, the Commissioner may take recovery action against the director personally to recover the penalty, which is equivalent to your company’s unpaid PAYG withholding or SGC liabilities.

Under STPR, the ATO is going to be aware of any obligations before they are due and payment breaches much quicker than they have in the past, allowing them to take action quicker than ever before.

For more information about STPR and the implications for companies and their directors visit our website