If you employ staff, you need to ensure that you are complying with “version 2” of Single Touch Payroll. This will involve updating the settings in your payroll software.
With the ATO now getting huge amounts of payroll data – we expect there will be a large increase in audit activity around superannuation payments – so the payment of your employees superannuation by the due date should be your highest priority to avoid penalties.
SINGLE TOUCH PAYROLL BACKGROUND
Single Touch Payroll (“STP”) was introduced a few years ago with the purpose of having all employers report wages to the ATO in real time. Essentially, employers are required to submit wage data to the ATO every payday.
THE PURPOSE OF STP
There are many purposes of STP, some more obvious than others (and some that the Government and the ATO are more willing to announce than others).
The obvious one is increased transparency for employees who can now look up their YTD wages easily in MyGov.
From a business perspective, it will allow the ATO to pre-fill your wage data on your BAS’s, and will automatically report data like child support income to other Government agencies – saving time and red tape.
From an employee perspective, it gives the Government oversight over wages and superannuation to help ensure that these are being paid (more on this shortly).
STP is being phased in over time. A few years ago “version 1” was introduced, which resulted in the basics being reported to the ATO. This year the ATO is updating this to “version 2”, which requires a greater breakdown of wages (for example, the ATO now want to know the full breakdown of wages into sub-categories like allowances, overtime, etc).
From an employers perspective, to comply with the new v2 requirements, you need to go into your payroll software and go through the process of updating your payroll categories to the new standards. Each payroll software will have instructions on how to do this – we have links to a few below to assist you:
- Xero: https://www.xero.com/au/programme/single-touch-payroll/stp-2/
- QuickBooks Online: https://quickbooks.intuit.com/learn-support/en-au/help-article/payroll-compliance/single-touch-payroll-stp-phase-2-hub/
- Reckon: https://www.reckon.com/au/small-business-resources/single-touch-payroll/stp-phase-2/
- MYOB AccountRight: https://help.myob.com/wiki/display/ar/Getting+ready+for+STP+Phase+2
- KeyPay: https://www.keypay.com/resources/single-touch-payroll-phase-2-what-to-expect-how-to-get-ready
- MYOB Essentials: https://help.myob.com/wiki/display/myob/Getting+ready+for+STP+Phase+2
ATO AUDIT ACTIVITY
With the ATO having greater visibility, it also makes it easier to see which employers are doing the right thing and which aren’t.
In a talk given by an assistant commissioner of the ATO, it was stated that from mid to late 2023 the ATO will start using STP data to commence superannuation audits on employers that are either not paying superannuation, or paying it late.
The ATO will be able to do this efficiently and effectively because they will have:
- The amount of superannuation payable on wages – thanks to the data reporting via STP; and
- The amount of super paid – thanks to clearing house data reporting (remembering that all superannuation must be paid via a clearing house these days)
It will be a simple matter of them cross-checking the two against each other and sending letters to those that aren’t paying super for their staff.
CONSEQUENCES OF LATE PAYMENT OF SUPER
So you pay your super late, so what? The consequences of paying late (even 1 day late) are:
- You are required to lodge a superannuation guarantee form;
- An admin penalty of $20 per employee (per quarter) applies;
- Interest is payable from the end of the quarter until the superannuation guarantee form is lodged (regardless of when superannuation was paid);
- The payment of super is no longer tax-deductible
If you think about this, if your superannuation payment is $10,000 and you no longer get to claim it as a tax deduction, you will end up paying an additional $2,500 in tax (assuming the company tax rate of 25%). That’s a big penalty for being just 1 day late. Not to mention the admin fees and interest that apply on top of this.