Changes are due to come into effect shortly, but what does it mean from a practical perspective?
There are two main types of employers that will be impacted:
1. Employers with ‘closely held employees’ were exempt from reporting payments to these
employees through STP. Closely held employees are directly related to the business from
which they are being paid, either as family members, directors, beneficiaries etc.
2. The second group are ‘micro-employers’, who employ between 1 and 4 employees and were able to report on a quarterly basis through their tax agent. For many, the concessions will change, and reporting will have to be done in real time.
If you are one of the above employers, keep reading or please get in touch. We have a number of tools that can assist you in managing your reporting and we can help you determine whether there may still be some reporting concessions that apply.
Employers of ‘closely held employees’
Small employers (defined as having 19 or fewer employees) were required to report most payroll activities through STP from 2019. However, until the end of this month, they have been exempt from reporting closely held employees through STP. As of 1 July, these payments will either have to be reported in real time (at the time of the pay event) or can be reported on a quarterly basis.
If employers choose to report quarterly for their closely held employees, there are two options:
i. Report actual payment amounts when the activity statement for that quarter is due;
ii. Report a reasonable estimate, based on amounts paid and tax withheld the previous year. Corrections to these estimated amounts can then be made the following quarter.
The information required, and method of reporting is the same as for those employees not closely held (via STP software). If you only have closely held employees, and this is the first STP reporting you are required to do, please contact us. We can discuss the options available, including those within your accounting software or free software solutions.
Quarterly reporting concessions for ‘micro-employers’
Unless micro-employers are experiencing ‘exceptional circumstances’ and meet a number of other criteria, STP reporting will need to move to real time. This can be done through accounting software, or via free payroll software, and we would be happy to assist you with the reporting aspect.
On our website, and available from our office, are forms to provide us with the information we need to do your reporting. Our ‘Employee details’ form will ensure that all employees are correctly on the system, and our ‘Pay details’ form will enable us to report exactly what you have paid to each employee. The following link will take you to our website where these forms can be downloaded and printed.
As suggested, quarterly reporting may remain an option if eligibility requirements are met.
Your tax agent will have to apply for the concession with the ATO, with applications for the new financial year not yet open. Please let us know if you think the following all apply to you:
You must be a micro-employer on the day of the concession application, that is have
between 1 and 4 employees;
You must lodge your activity statements electronically through a registered tax or BAS agent;
You must have a non-computerised payroll system, such as a manual system or keeping
records on a spreadsheet or paper;
All amounts owed to the ATO are either not yet due or on a payment plan;
All ATO lodgment obligations are either not yet due or subject to a deferral;
You must meet guidelines for exceptional circumstances, as follows:
o Natural disaster, disasters or other events that may have impacted individuals, a
region or industry;
o Impeded access to records;
o Serious illness or death of a family member, tax professional or critical staff
member;
o Considerable lack of knowledge and understanding of taxation obligations;
o System issues, either with ATO online services or entity business system;
The following may also be considered as exceptional circumstances in this instance:
o Seasonal or intermittent workers, where micro-employers have between 0 and 4
employees for most of the year and increase their workforce for less than 3 months
of the financial year;
o No, or unreliable internet connection, with an inability to connect or consistent
drop-outs, consistent multiple connection attempts or exceedingly slow data
transfer.
Should you meet the above criteria, we can apply, or re-apply, for the quarterly reporting concession as soon as it becomes available. Reporting will then occur after the end of each quarter, in line with activity statement lodgment. Our ‘Employee details’ form and ‘Pay details’ form are still the most appropriate way to ensure that we are reporting the correct information. See the website link above or contact our office.
As with all changes, this matter has brought some confusion. Please don’t hesitate to contact us if you have questions or would like to discuss the best option for you.