STP 2018/1 - Explanatory statement

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COMMONWEALTH OF AUSTRALIA

Taxation Administration Act 1953

Explanatory Statement

General Outline of Instrument

1. This instrument is made under subsection 16-153(6) and section 16-180 of Schedule 1 to the Taxation Administration Act 1953.

2. This instrument exempts an entity from its obligations to provide payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant information has been reported under Single Touch Payroll.

3. The instrument is a legislative instrument for the purposes of the Legislation Act 2003.

4. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Date of effect

5. The instrument commences on the day after its date of registration on the Federal Register of Legislation.

What is this instrument about?

6. Single Touch Payroll is a new system for the reporting of employee payroll and superannuation information by certain entities. Division 389 of Schedule 1 to the Taxation Administration Act 1953 provides the basis for these new reporting arrangements.

7. From 1 July 2018, Single Touch Payroll reporting will be mandatory for 'substantial employers', as defined in subsection 389-5(6) of Schedule 1 to the Taxation Administration Act 1953.

8. Entities that report under Single Touch Payroll from 1 July 2018 are exempted from providing payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant payments have been included in Single Touch Payroll reporting.

9. Single Touch Payroll reporting will be available prior to 1 July 2018 and entities are being encouraged to enter the system on a voluntary basis if they are using a compatible payroll solution. A list of compatible payroll solutions will be accessible through the ATO website.

10. This instrument extends the exemption from Pay as you go (withholding) payment summary and annual reporting requirements to those entities that enter the system prior to 1 July 2018, to the extent that amounts that would otherwise be required to be reported on a payment summary and annual report are fully reported through Single Touch Payroll.

What is the effect of this instrument

11. The exemptions provided under this instrument ensure that entities that voluntarily enter the system prior to 1 July 2018 will experience the full benefits of reporting under Single Touch Payroll.

12. In particular they will be relieved of payment summary and annual reporting obligations that would require them to report the same information twice.

13. However, entities that are required to withhold from payments that they do not report through STP will still be required to give payment summaries to recipients in relation to those payments and a payment summary annual report to the Commissioner. This includes both payments to a recipient that an entity does not fully report through Single Touch Payroll for the year and payments that cannot be reported through an entity's payroll solution.

14. An assessment of the compliance cost impact indicates that the impact will be minor for both implementation and on-going compliance costs. The new instrument is of a minor or machinery nature.

Consultation

15. The reporting requirements have been developed through a long period of consultation with payroll software developers and bodies representing payroll users.

Statement of Compatibility with Human Rights

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

PAYG Withholding annual reporting exemptions: Single Touch Payroll optional year

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

The instrument provides an exemption for an entity from its obligations to provide payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant information has been reported under Single Touch Payroll.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a minor or machinery nature.

Conclusion

This legislative instrument does not raise any human rights issues.

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13 February 2018

Deborah Anne Jenkins
Deputy Commissioner of Taxation

Legislative References:
Acts Interpretation Act 1901
The Act

Taxation Administration Act 1953
The Act

Human Rights (Parliamentary Scrutiny) Act 2011
The Act

Legislation Act 2003
The Act

Related Legislative Determinations:
STP 2018/1