Large employers can face up to over $500 million in penalties for missed or late Single Touch Payroll reports as the transition year for bigger businesses tapers out.
Over $500k in penalties detailed for STP non-compliance
With employers with 20 or more employees required to be STP-compliant from 1 July 2018, the 12-month transition period has now run its course, meaning penalties are now in effect.
Small businesses, or those with 19 or less employees, will still be afforded protections of the transition year as, under the law, they are only required to report through STP from 1 July 2019.
The ATO has now revealed to Accountants Daily the various penalties that can apply for missing or late STP reports, although the agency has confirmed it would “generally only apply these penalties where an employer is routinely and repeatedly late”.
“The penalty is calculated at the rate of $210 for each 28 days or part thereof that the Single Touch Payroll report(s) is/are overdue (to a maximum of $1,050),” an ATO spokesperson told Accountants Daily.
“This penalty increases to a maximum of $2,100 for medium entities, $5,250 for large entities and $525,000 for significant global entities.
“In addition, there is a penalty in the law for making a false and misleading statement within a STP report.
“The STP law allows for the commissioner to provide a period of grace for an employer to correct a mistake without penalty; as such, we would generally only apply penalty where an employer knowingly reports incorrect information and does not correct it within a reasonable time frame — usually that period is 14 days.”
The Tax Office earlier revealed that only 58,000 large employers were reporting through STP — out of a total of around 70,000 registered for tax purposes in Australia.
In contrast, as of 30 June, there were 107,000 small employers who have commenced STP reporting, out of a total of approximately 750,000 employers.
Deferrals and concessional reporting
With commissioner Chris Jordan providing a three-month buffer from 1 July 2019, small employers will not need to apply for a deferral as long as they start reporting by 30 September 2019.
Micro employers, specifically those with one to four employees, can choose to report through their registered tax or BAS agent on a quarterly basis until 30 June 2021, but their registered agent must apply for the concession by 30 September 2019.
Closely held payees do not need to report through STP for the 2019–20 financial year. They will need to report from 1 July 2020 and will have the option to report quarterly. The ATO will need to be notified of closely held payees for the 2020–21 financial year.
Seasonal and intermittent employers are eligible for the quarterly reporting concession and will need to apply for it by 30 September 2019.