Posted July 29, 2019
We have been talking about Single Touch Payroll for months now, and for good reason. Single Touch Payroll is the biggest shakeup for the pay system for small business owners since the introduction of the GST or compulsory superannuation. It’s a huge deal, and it’s important that salon owners get it right.
You can read more about Single Touch Payroll in these blog posts –
So now let’s talk about the nasty side of things – what actually happens if you’re NOT Set up with Single Touch Payroll? What risk are you running by not getting it right?
From the 1st of July 2019 ALL businesses are required to submit their reports in a timely manner for Single Touch Payroll. In the previous administration phase in 2018/2019 Financial Year, the ATO did issue written notices to advice businesses that they had failed to report on time, so you can be sure that they’re on top of business owners.
Single Touch Payroll allows the ATO to penalise non-compliant businesses quicker than they ever have before. The ATO has real-time access to your payroll details, allowing them to easily determine if you are paying your staff in accordance to the Hair and Beauty Award 2010, especially key payments like superannuation. It was reported at the end of 2017 that Australian employers as a whole had underpaid their employees by at least $17 billion in superannuation contributions over the 8 years prior. This failure to pay the required 9.5% of earnings into super has resulted in mammoth penalties from the ATO, and with the introduction of the Vulnerable Workers Act in 2017, the ATO has increased fines for non-compliance and incorrect recordkeeping to rates as high as $630,000.
As of this time, the ATO has stated that there will be an administrative penalty for those who do not comply – what exactly that costs we aren’t sure yet, but it’s too much to risk for the future of your business. It’s important to note though that the ATO has said there will be no penalties for the first 3 months of the STP system as the kinks are ironed out – but that does not mean that if you ignore STP for longer than 3 months that the penalties won’t apply retroactively. Penalties have started to be released for those businesses that had to transition in 2018 and have been calculated at $210 for each 28 days or part thereof that the Single Touch Payroll reports were overdue, to a maximum of $1,050. This penalty increases to a maximum of $2,100 for medium entities, $5,250 for large entities and $525,000 for significant global entities. There will also be fines for lodging false or misleading reports.
There are some exemptions to Single Touch Payroll, specifically salons based in a totally rural area with no reliable connection to the internet. These are the only cases for Single Touch Payroll exemption for salon owners, and in that instance, you will have to contact the ATO directly to validate your circumstances and exemption.
If you are a micro employer (1–4 employees) and need more support to move to real-time digital reporting you can choose to report quarterly through your registered tax or BAS agent until 30 June 2021. To be eligible for the micro quarterly reporting concession, you must be a micro employer and lodge your STP reports through a registered tax or BAS agent.Y our registered agent must apply for the concession on your behalf by 30 September 2019. To be eligible you must have between 1–4 employees on the day of application.
You must also meet both of the following criteria:
- all amounts owing to us are either not yet due or subject to a payment plan
- all lodgement obligations are either not yet due or subject to a deferral.
If you accidentally miss a Single Touch Payroll report, you have some options. You can lodge the missed report for that month, and if all employees in the missed report will be paid again in the net regular pay run you can check and make sure the YTD’s reflect all amounts in the next regular pay run. If all employees are not being paid again, you must lodge an update event within 14 days of the report deadline to update your employees YTD Balance.
If you continue to miss reports, you may be subject to Failure to Lodge penalties beyond the first year of reporting.
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