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‘More to learn’: ATO on payroll compliance fears

‘More to learn’: ATO on payroll compliance fears

The ATO has committed to learn more about payroll process before using the incoming single touch payroll regime for the smaller end of town as a “compliance stick”.

Tax&Compliance Jotham Lian 22 October 2018
— 1 minute read

Speaking on the ATO’s webcast, Assistant Commissioner and STP lead, John Shepherd said that the Tax Office would have to learn more about payroll processes to understand what is and what is not a compliance issue worth bringing up to employers.

“We need to learn a bit more about payroll processes and systems over the next 12 to 18 months so we can interpret it and actually understand what’s just something that’s going to correct itself over time and what’s something that's a real genuine compliance issue,” said Mr Shepherd.

“This is a very different to other reporting, it is not a traditional form reporting process.

“The ATO and other government agencies that use that data have to think about that in a different way and accept that there are some changes that will flow through when we’re getting a glimpse into people’s payroll system at a point in time.”

Institute of Certified Bookkeepers executive chair Matthew Addison said there have been concerns from advisers and clients that the ATO would question their pay-run data but believed the Tax Office would take a facilitative approach in the early phases of STP.

“You can’t hammer the employer because they missed a report; you can’t hammer an employer because the SG accrual is not 9.5 per cent of wages because the complexity around SG is ginormous,” said Mr Addison.

“The ATO have got right on board with what data is coming in and doing a whole lot of analytics behind learning from what they see on an industry basis and an employer basis and the next couple of years is really about engaging with the employer to ask what’s going on, is there a reason it doesn’t look right.

“If there is a reason for that particular employer that SG is at 4 per cent because of the way the wages are structured, then that will go on the record and the ATO is not going to ring them up every week and go why is your SG too low?”

“There is a compliance stick here, there is a pulling of employers into line a little bit but we’re on a journey of government understanding that payroll is complex when we look at all the requirements.”

While legislation to expand STP to employers with 19 or less employees from 1 July 2019 is still before the Senate, the ATO have begun work on concessions for micro businesses, confirming that employers with one to four employees will not have to buy payroll software to be STP compliant.

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‘More to learn’: ATO on payroll compliance fears
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