This Government initiative is designed to streamline business reporting obligations, and will change to the way employers report their tax and superannuation. STPR will offer most businesses the opportunity to improve processes and procedures.
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The implementation of the STPR will effectively introduce a two tier system of approved methods of reporting to the Commissioner. This consists of the STPR for PAYG withholding and superannuation guarantee, while all other withholding amounts are still required to be lodged and reported through BAS, e.g. FBT and PAYG Instalments. Whilst the STPR may alleviate some administrative burdens for employers and is promoted as a way of aligning existing payroll functions with reporting obligations, it remains to be seen how many employers opt to align the payment of their PAYG withholding with their STPR reporting dates after they consider the cash flow disadvantages.
A further concern is the expectation or assumption the STPR will mean that employees will be able to view their payroll related information and annual payment summary online through MyGov. This will require employees to set up an on-line MyGov account, which is a further level of administration for both taxpayers and their tax agents. Once such an account is established for tax purposes, then all tax related information such as assessments notices etc, are routinely sent to the MyGov account, rather than by post. If the employee has a tax agent there may be further administrative problems as it will require tax agents to obtain these documents from their clients, e.g. to check their assessments, which differs from current practices.
STPR means the Commissioner will have access to even more information to perform data-matching in determining if all Superannuation Guarantee Charge (‘SCG’) and PAYG withholding obligations are met. Any errors by employers using this system are likely to drastically increase the chances of an ATO audit or review. However, it may be possible to run reports periodically from the new STPR software that show all the information that has been reported to the ATO, allowing errors to be identified in time to correct the amounts before the end of the financial year.
Before the compulsory 1 July 2018 start date, employers will need to ensure their payroll system is STPR enabled to be compliant with the new law. This may involve additional cost for employers, particularly those that do not currently use software based payroll systems. A range of payroll software providers are working with the ATO on product updates from 1 July 2017. To help with the transition to STPR, it was announced in the STPR media release by the Minister for Revenue and Financial Services, that the Government will offer small businesses with a turnover of less than $2 million, a $100 non-refundable tax offset for STPR enabled software. The offset will be made available for new software purchases or subscriptions made in the 2017/18 financial year.
Further information regarding what software is compatible and how to apply for the rebate will be released closer to the start date.
It is anticipated that the ATO will start reviewing real time data from 1 July 2018, so those businesses that have planned early will be well placed to avoid any unwanted attention from the ATO.
BDO recommends you understand how this change applies to your organisation and begin planning your roll-over to this new reporting requirement. Need help? Register here for a complimentary STPR action plan consultation with a BDO expert.