Pay summaries out the window: ATO moves to quell confusion amid payroll changes

The tax office has issued a PSA explaining why workers’ annual pay summaries may be missing this year, in a bid to stem confusion about changes arising from the Single Touch Payroll (STP) rollout.

While the impending soft and hard deadlines for STP reporting are approaching for small employers, business owners aren’t the only ones with changes to contend with as a result of the scheme.

About 9 million workers who for years received annual payment summaries to lodge their tax returns will instead have their income statements pre-filled into online lodgement systems this year.

The changes will make things easier for workers and businesses, but with the STP rollout still in its relative infancy, the ATO has been proactive about equipping businesses to deal with confused team members.

It has been encouraging employers to hand out its fact sheets on changing payroll rules for some months, moving to counter worries some workers may think their bosses are pulling the wool over their eyes.

“If you use a tax agent to lodge your return, you don’t need to do anything,” assistant commissioner Karen Foat said in a statement.

“We provide your agent with this information and they can lodge your return as usual.” 

Businesses that don’t plan to sign up for STP reporting until the hard deadline on 30 September may still need to issue payment summaries, as well as micro employers with approved quarterly deferrals.

Employers have until 31 July to finalise workers’ income statements, either through real-time STP reporting or the ol’ fashion way.

From 2019-20 onwards, employers will be required to finalise pay data by 14 July, but because of the STP rollout, the date has been pushed back a few weeks this year.

No timeline change if you aren’t using STP yet

Don’t get confused though. Businesses not yet reporting through STP will still be required to provide pay summaries by 14 July.

This creates an awkward situation for early birds, as taxpayers who lodge before employers finalise the process will be unable to complete their returns.

Instead, taxpayers will be notified the pre-fill information is not ready, and while the ATO will send a notification out when employers finalise payroll, the regulator is advising workers to wait.

“We know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. That’s why we suggest waiting and letting the ATO do most of the work pre-filling your tax return,” Foat said.

Employers are being advised to be transparent with their workers about their company’s STP status, whether payment summaries will be provided and when payroll finalisation is expected to occur.

“Employers should tell their employees how they should expect to receive their payment summary this year,” an ATO spokesperson said on Friday.

Human resources expert David Wurth says it’s a good opportunity for businesses to engage with workers about upcoming payroll changes and superannuation reforms.

“Employers should be much, much more communicative,” he tells SmartCompany.

“It’s a good opportunity, with all these things happening, to get some information sessions or team meetings going.”

Closely held payees aren’t required to be paid under STP reporting as yet, so businesses with family members working in their companies will have extra time to prepare.

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