Single Touch Payroll: what insolvency practitioners need to know

Since 1 July 2018, Single Touch Payroll reporting (STPR) has been mandatory for ‘substantial employers’ defined as those with 20 or more employees.  STPR essentially requires employers to report employee payments including pay as you go (PAYG) withholdings and superannuation amounts to the Australian Taxation Office (ATO) in real time, as employees are paid. 

While the ATO has marketed the move as streamlining payroll reporting for employers, the introduction of STPR will enhance the ATO’s ability to detect audit targets and identify employers falling short of their taxation obligations. 

Exemptions for insolvency practitioners

The ATO website states that you are exempt from STPR if you are an “insolvency practitioner for an employer with 20 or more employees” for the 2018-19 tax year.  It further states that it is not necessary to notify or apply to the ATO in order to rely on the exemption, however the ATO recommends that records are kept supporting the decision to do so.

However, the legal basis for this exemption is unclear as neither of the two legislative instruments made by the Deputy Commissioner of Taxation in relation to STPR provide for such an exemption.

Deferral of obligations

Separately to the exemption, an employer may apply to the ATO for their STPR obligations to be deferred to a later date in certain circumstances, including where the employer has entered administration or liquidation.  The date to which the obligations will be deferred is unclear.

Lavan comment

A number of aspects of the insolvency practitioner exemption require clarification, including:
  • whether the exemption is available to insolvency practitioners in respect of all types of external administrations;
  • whether the exemption extends to managing controllers who are not insolvency practitioners, for example, mortgagees in possession;
  • whether the exemption will be available beyond the 2018-19 tax year; and
  • the interaction between the exemption and other requirements of STPR, for example, deferral on the basis of the employer having entered administration or liquidation. 
Unlike the insolvency practitioner exemption which, at least according to the ATO website, applies without the insolvency practitioner needing to inform, or apply to, the ATO, a deferral requires an application to be made to and determined by the ATO.
Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.