Practice Update march 2019

Ian Campbell • 25 March 2019
Cash economy under fire: ATO directly contacting taxpayers

Single Touch Payroll Update

March 2019

 

Understanding STP obligations

Single Touch Payroll (STP) is a Government initiative aimed at cutting red tape for employers and improving visibility of compliance with business obligations such as:

q salary and wages and similar payments;

q Pay As You Go (PAYG) withholding; and

q certain superannuation related information;

by requiring ‘real time’ reporting of payroll information directly to the ATO.

Importantly, STP is designed to extract information that already exists in an employer’s payroll system.

As such, it is not intended to impose any additional burden on employers, other than requiring them to report the information to the ATO sooner.

From a practical perspective, businesses must use STP compliant software to comply with the new obligations.   This will necessitate updating or changing their current payroll software.

Generally, most payroll software providers will have already adapted their software to ensure the required reporting capability has been incorporated.

Once a business has adopted the appropriate software, ongoing reporting obligations should be dealt with as part of an automated software function.

Effectively, employers will send their employees' relevant payroll information required under STP to the ATO each time they run their payroll and pay their employees.

Crucially, in complying with their STP obligations employers will not change their payroll cycle.

When a business reports to the ATO via STP, the relevant employees will be able to view their year-to-date tax and super information through myGov.

As a result of STP reporting, a number of ongoing compliance obligations for employers will be streamlined, and/or removed.   Some benefits for employers under STP include the following:

q The removal of the need to issue an annual 'Payment Summary' to employees   for payments reported to the ATO via STP, provided an employer lodges a ' finalisation declaration' (i.e., generally by 14 July, although extensions are in place for the first year of STP implementation).

q The removal of the need to lodge a 'Payment Summary Annual Report ' for payments reported through STP.

q From 1 July 2019, STP will enable the pre-filling of BAS Labels W1 (gross salary and wages and other payments) and W2 (amounts withheld from salary, wages and other payments) for employers that are small or medium withholders.

q The streamlining of employee documentation such as the lodgment of   ' TFN Declarations' and 'Withholding Declarations' via enabled software.

Editor: It is important to understand that STP does not impact or change when employers must actually remit PAYG withholding amounts to the ATO or make super contributions.   The new STP obligations simply affect when employers must report these payments to the ATO.


 

Original commencement date

STP commenced from 1 July 2018 , for employers with 20 or more employees (i.e., substantial employers).

When determining whether or not the 1 July 2018 start date applied, an employer was required to do a headcount of the number of employees they had on 1 April 2018.

Broadly included in the headcount were all full-time and part-time employees, casual employees who worked at any time during March 2018, overseas employees, any employees absent or on leave (paid or unpaid) and seasonal employees.

 

Pending STP commencement date for small employers now law

Small employers (being those with less than 20 employees) are now technically required to commence their STP reporting obligations from   1 July 2019 .

The intended STP obligations on small employers has only recently become law, with the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 finally being passed by both houses of Parliament on 12 February 2019.

This means that from 1 July 2019 all employers, no matter their size, will generally be required to comply with the STP reporting obligations.

The ATO says it will be writing to small employers who have 19 or less employees and already use payroll software to tell them about STP, and remind them that if their payroll software offers STP, they can update their software and start reporting now.

 

Solutions for micro employers

For micro employers (generally defined as businesses with one to four employees) who do not currently have payroll software, a range of simple, low-cost solutions are expected to be available from early 2019.

These solutions may include mobile apps, simple reporting solutions and portals.

An alphabetical list of the companies intending to offer these solutions has been published on the ATO website (and reproduced for your reference below).

The ATO does not (and nor does our firm) specifically endorse any of the suppliers listed below:

q   AccXite Pty Ltd

q   BAS Off Pty Ltd

q   Catsoft

q   Easy Pay Slip Pty Ltd

q   Employment Hero Pty Ltd

q   e-PayDay Pty Ltd

q   ePayroll

q   Etax Accountants Pty Ltd

q   Free Accounting Software

q   Globe BD

q   GovReports

q   Intuit Australia Pty Ltd

q   LodgeiT Pty Ltd

q   Ironbark Software

q   Myaccountant Technology Pty Ltd

q   MYOB Australia Pty Ltd

q   OB Secure Messaging

q   Sodapay

q   PwC Australia

q   Reckon Australia Pty Ltd

q   Single Touch Pty Ltd

q   SRI Enterprise Software Pty Ltd

q   Xero Australia Pty Ltd

 

Flexible ATO implementation

The Commissioner of Taxation, Chris Jordan,   recently made a personal guarantee that the ATO’s approach to STP will be “flexible, reasonable and pragmatic”.

In particular, despite the 1 July 2019 start date for small employers, the Commissioner has stated that they can start STP reporting any time from 1 July 2019 to 30 September 2019 .

This effectively provides a three-month implementation reprieve for small employers.

The ATO has also indicated that there will be no penalties for mistakes, missed or late reports for the first year and exemptions will be provided from STP reporting for employers experiencing hardship, or in areas with intermittent or no internet connection.

 

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Practice Update February 2026

11 February 2026
Readiness strategies in preparation for the Payday Super If you run a small business, paying Superannuation can feel like “one more admin job” on top of payroll, BAS and everything else. Two key changes mean Superannuation deserves a fresh look this year: The Super Guarantee (SG) rate is 12% for 1 July 2025 to 30 June 2026 (and remains 12% after that). From 1 July 2026, “Payday Super” starts — employers will be required to pay SG on payday , rather than quarterly, and contributions must be paid into the employee’s fund within 7 days of payday . What does SG at 12% mean in everyday terms? SG is calculated on an employee’s Ordinary Time Earnings (OTE) (often the base rate and ordinary hours, plus certain loadings/allowances depending on how they’re paid). The key point for most businesses is that the Superannuation cost is now 12 cents for every $1 of OTE. If you haven’t already, it’s worth confirming whether your staff packages are “plus super” (super on top) or “inclusive of super” (rare, but it happens). A small misunderstanding here can quietly create underpayments. What is “Payday Super” and why is it changing? Many employers pay the Superannuation Guarantee (SG) quarterly. Payday Super changes the rhythm: From 1 July 2026 , each time you pay OTE to an employee, it creates a new super payment obligation for that payday. You’ll have a 7-day due date for the SG to arrive in the employee’s fund after each payday (this is designed to allow time for payment processing). The ATO is implementing the change, and guidance is already being published to help employers prepare. This reform is aimed at reducing unpaid super and making it easier for workers to see whether super has actually been paid, closer to when they’re paid wages. Quarterly vs payday Super

Practice Update January 2026

20 January 2026
A real-world case study on trust distributions Mark and Lisa had what most people would describe as a “pretty standard” setup. They ran a successful family business through a discretionary trust. The trust had been in place for years, established when the business was small and cash was tight. Over time, the business grew, profits improved, and the trust started distributing decent amounts of income each year. The tax returns were lodged. Nobody had ever had a problem with the ATO. So naturally, they assumed everything was fine. This is where the story starts to get interesting. Year one: the harmless decision In a good year, the business made about $280,000. It was suggested that some income be distributed to Mark and Lisa’s two adult children, Josh and Emily. Both were over 18, both were studying, and neither earned much income. On paper, it made sense. Josh received $40,000. Emily received $40,000. The rest was split between Mark, Lisa, and a company beneficiary. The tax bill went down. Everyone was happy. But here’s the first quiet detail that mattered later. Josh and Emily never actually received the money. No bank transfer. No separate accounts. No conversations about what they wanted to do with it. The trust kept the funds in its main business account and used them to pay suppliers and reduce debt. At the time, nobody thought twice. “It’s still family money.” “They can access it if they need it.” “We’ll square it up later.” These are very common thoughts. And this is exactly where risk quietly begins. Year two: things get a little more complicated The next year was even better. They used a bucket company to cap tax at the company rate. Again, a common and legitimate strategy when used properly. So the trust distributed $200,000 to the company. No cash moved. It was recorded as an unpaid present entitlement. The idea was that the company would get paid later, when cash flow allowed. Meanwhile, the trust needed funds to buy new equipment and cover a short-term cash squeeze. The trust borrowed money from the company. There was a loan agreement. Interest was charged. Everything looked tidy on paper. From the outside, it all seemed sensible. But economically, nothing really changed. The trust made money. The trust kept using the money. The same people controlled everything. The bucket company never actually used the funds for its own business or investments. This detail becomes important later. Year three: circular money without anyone realising By year three, things had become routine. Distributions were made to the kids again. The bucket company received another entitlement. Loans were adjusted at year-end through journal entries. What is really happening is a circular flow. Money was being allocated to beneficiaries, then effectively coming back to the trust, either because it was never paid out or because it was loaned back almost immediately. No one was trying to hide anything. No one thought they were doing the wrong thing. They were just following what they’d always done. This is how section 100A issues usually arise. Slowly, quietly, and without any single dramatic mistake.

Practice Update December 2025

3 December 2025
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