Payroll ‘health checks’ for late employers as ATO reveals common STP errors
The ATO is engaging businesses who lodge late payments with payroll ‘health checks’ as single touch payroll brings about a new world in tax administration.
Employers filing multiple payroll records and an inability to finalise data in cases where incorrect payments have been made have emerged as common issues facing businesses coming to terms with single touch payroll (STP) reporting.
Almost two months after the hard deadline for employers with 19 or fewer workers to adopt real-time payroll, more than 462,000 firms have signed up, almost double the number from August, with 62% of small employers now operating under the new regime.
Those were the figures cited by Australian Taxation Office (ATO) deputy commissioner James O’Halloran in a speech delivered to PwC’s payroll managers forum last week, which was published to the ATO’s website yesterday.
The wide-ranging address covered everything from the evolving payroll landscape to new types of compliance activity and how employers are handling the STP changes.
O’Halloran said the vast majority of firms are getting STP reporting right, with 82% of pay events lodged so far not triggering any exceptions, and most reports lodged on time.
But some “common observations” have also emerged, including an inability to accept records because multiple identification numbers have been provided, and payments being made with incorrect electronic funds transfer codes (these enable BPAY).
“If an employer is using cloud products, it’s imperative to notify us of their Service Set Identifier (SSID) via access manager, their registered agent, or to call us,” a written copy of O’Halloran’s speech reads.
The new payroll regime has necessitated significant changes for hundreds of thousands of small employers across the country over the last 18 months, with many switching over to digital systems for the first time, taking on additional costs in the process.
The transition has also come at a time when payroll failures, including instances of wage theft, have been the subject of considerable media scrutiny, following high-profile scandals at companies such as Woolworths, but also within many small companies across the country.
The tax office is increasingly in a position to understand exactly where employers are going wrong, whether with payroll or superannuation obligations, and legislators are taking notice.
O’Halloran addressed payroll through the lens of PAYG withholding and superannuation guarantee obligations, which are ongoing areas of focus for the tax office.
He noted the tax office is working directly with “software and solution providers” to validate the STP information it’s receiving, with standard business reporting-enabled cloud software simplifying how businesses interact with the ATO.
The tax office is refining its processes in a bid to look further into the reams of new data it’s receiving, with an eye to answering “key questions”, such as whether lodgements are being made properly, and whether payments are being made on time. The upshot is that if they aren’t, the tax office is in a position to know and act.
“We’re working through the data and gaining insights that help us identify when employers are falling behind with their PAYG withholding or SG obligations,” O’Halloran said.
Employers submitting late reports are receiving “health checks”, using data from payroll providers to identify potential indicators that a pay event might require official attention.
“About 8% of STP reports are received over seven days after staff have been paid; legislatively, STP reports must be submitted on or before the date staff are paid,” O’Halloran said.
“We’re also using the insights and learnings from our health checks to support a range of stakeholders who report through STP.
“We do this by working directly with software and solution providers to validate the information being received.
“From this, I’m advised this has led to multiple updates in software products or practices,” he continued.
