Recent ATO Announcements

By Snehal Shah

Deferral of Single Touch Payroll (STP) Phase 2

Employers have been required to report their payroll details to the ATO on a real-time basis through the STP system since 2018.

STP Phase 2 was to be implemented from 1 July 2021, requiring employers to provide more granular detail, including:

  • Nature of employment (full-time, part-time, casual, working holiday maker)
  • Type of payment (salary, allowance, paid leave, directors fee)
  • Working of PAYG Withholding
  • Superannuation liability

Implementation of STP Phase 2 was initially deferred to 1 January 2022. The ATO has recently announced that employers who commence reporting by 1 March 2022 will be considered to have met the 1 January deadline.

Your payroll software provider will have to update its systems to allow for the additional reporting obligations by the deferred due date. Depending on your software provider, you may be required to update the information on your employees in the system.

This deferral does not impact payments by employers to closely held payees (for example, by a company to its directors or shareholders), who are still required to commence reporting through STP for payments commencing 1 July 2021.

Allocation of professional firm profits

Earlier this year, the ATO released draft guidelines outlining its compliance approach to the allocation of profits by professional firms.

The ATO has always been concerned about the use of companies, trusts and other structures whereby professional income is diverted so that the professional receives significantly lower profits than would otherwise be the case.

Once finalised, the guidelines will apply to any professional firm, including those engaged in accounting, architectural, engineering, financial services, legal and medical professions.

The draft guidelines specify a prescriptive risk assessment framework which assigns a score for three factors. The lower the score, the lower the risk of the ATO applying the general anti-avoidance provisions to attack the manner in which the profits have been allocated.​