It’s been said before and no doubt will be said again.
The exemptions for Single Touch Payroll reporting which have been available to closely held employees are ending on June 30.
That means that all payments to directors, shareholders and family members who are employed and paid for their services within a business will generally be required to have their income reported through the payroll system.
And typically there are loopholes. And with those loopholes, there are unintended consequences which will raise their ugly head if all aspects of payroll, superannuation, payroll tax and workers compensation are not considered.
What this means for the average business is that a thoughtful review of all remuneration arrangements should be undertaken. And this includes directors fees, and some trust distributions.
The new Single Touch Payroll reporting provisions allow for quarterly adjustments to payroll, or even for those adjustments to occur annually. This will be sufficient for many tax agents and payroll professionals to think that business as usual will be ok.
Make no mistake, Single Touch Payroll reporting was introduced to make sure that all income paid to individuals is captured in the payroll system.
When we consider that Single Touch Payroll 2.0 which is to be introduced early in 2022, and this increases the number of government agencies who will have access to the information. The widening of information sharing requires timely reporting of income to allow for the accurate assessment of family benefits payments for example, and the correct deductions for child support payments, et cetera.
If we throw Superannuation Guarantee payments into the mix, and consider the penalties for late payment of employee super, it all adds up to a big sting in the tail.
While there is no one answer for every circumstance, it’s clear that business as usual will not be the best option for most.
If you want to understand more of the nuance this change will bring, you know where to find us.