STP 2019/5 - Explanatory statement
COMMONWEALTH OF AUSTRALIA
Taxation Administration Act 1953
Explanatory Statement
General Outline of Instrument1. This instrument is made under subsection 389-25 of Schedule 1 to the Taxation Administration Act 1953.
2. This instrument prescribes grace periods for the correction of statements made in Single Touch Payroll reporting.
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 effect5. The instrument commences on 1 July 2018, to ensure all entities who have reported through Single Touch Payroll from that date receive the benefit of the grace periods determined in the instrument.
What is this instrument about6. Division 389 of Schedule 1 to the Taxation Administration Act 1953 provides for the reporting of payroll and superannuation information by certain employers.
7. Within Division 389, section 389-25 allows the Commissioner of Taxation to determine grace periods within which an entity may correct earlier statements made in their Single Touch Payroll reports.
8. This instrument determines those grace periods.
What is the effect of this instrument9. The instrument establishes a grace period which allows an entity to correct an error within 14 days of the date on which the error is identified, or in their next regular Single Touch Payroll report for that person, but in all cases no later than the 14th day after the end of the relevant financial year in which the statement was made.
10. If an entity corrects a statement made in an earlier Single Touch Payroll report within the relevant grace period, they are protected from liability for making the original false or misleading statement.
11. If an entity does not correct a statement within the relevant grace period, it may be liable to a penalty for making a false or misleading statement.
12. The new instrument is of a minor or machinery nature. An assessment of the compliance cost impact indicates that both implementation and on-going compliance costs will be minor.
13. The new instrument commences on 1 July 2018. Subsection 12(2) of the Legislation Act 2003 prohibits a legislative instrument from commencing retrospectively unless certain conditions are met. This legislative instrument applies to allow businesses to correct errors at a later date without penalty for false or misleading statement. No person will be detrimentally affected by this retrospective commencement date except for the Commonwealth.
Background14. Before the introduction of Single Touch Payroll, withholding information during a financial year was only reported at a payer (eg. employer) level. Payee (eg. employee) level information was only reported once at the end of the financial year.
15. The introduction of Single Touch Payroll changes these reporting requirements for participating entities.
16. Single Touch Payroll provides that details of employee payments are to be reported on or before the pay date for each relevant employee. Employee level information will be reported throughout the financial year giving visibility, previously unavailable, to incorrect reporting at an employee level.
17. It is recognised that errors inevitably occur from time to time in the preparation of payroll information. Such errors may be identified at any time after the relevant pay date.
18. However, if an entity provides information to the Commissioner of Taxation which is not accurate, the law considers them to have made a false or misleading statement. This, in turn, may result in the entity becoming liable to an administrative penalty.
19. This is the case even if the entity did not intend for the information to be false or misleading.
20. Providing grace periods for correcting false or misleading statements is intended to provide a balance between the requirement for reporting entities to notify the Commissioner of information on or before the day they make payments and reporting accurate information.
21. In particular, the grace periods determined by this instrument are intended to provide reporting entities with time to conduct an assurance process on the information reported to the Commissioner and encourage correction of any false or misleading statements in a timely manner.
22. Aspects of taxation law, such as subsections 8K(2A) , 8N(2) and 284-75(8) of Schedule 1 to the Taxation Administration Act 1953, provide protection for an entity from these penalties in relation to information reported through Single Touch Payroll if those errors are corrected within the grace period determined by the Commissioner.
23. As a result, this instrument ensures that entities will not be subject to penalties when incorrect information is reported at the time of payment, provided that the error is corrected within the specified timeframe.
Consultation24. The applicable grace periods have been developed through a long period of consultation with payroll software developers and bodies representing payroll users, focused on the practicalities of proposed timeframes for correcting data when an error is identified.
Statement of Compatibility with Human Rights
This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Taxation Administration - Single Touch Payroll - Grace periods for correcting statementsThis 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.
OverviewThe instrument provides a period of grace for the correction of statements made through Single Touch Payroll reporting.
Human rights implicationsThis legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a minor or machinery nature. The instrument specifies how long an employer has to correct data reported through Single Touch Payroll when an error is identified.
ConclusionThis legislative instrument does not raise any human rights issues.
21 June 2019
Deborah Anne Jenkins
Deputy Commissioner of Taxation
Legislative References:
Acts Interpretation Act 1901
The Act
Human Rights (Parliamentary Scrutiny) Act 2011
The Act
Legislation Act 2003
The Act
Taxation Administration Act 1953
The Act
STP 2019/5