What are the Penalties for STP Failures?

STP has now been rolled out to smaller employers (19 or less employees) from 1 July 2019.

With the 12-month waiver on penalties now over for larger employers, the Tax Office has explained what these penalties will look like and how they will be applied.

The penalty is calculated at the rate of $210 for each 28 days or part thereof that the Single Touch Payroll (STP) report(s) is/are overdue (to a maximum of $1,050). The penalty increases to a maximum of $2,100 for medium entities, $5,250 for large entities and $525,000 for significant global entities.

There are penalties for late or missed STP reports, although the ATO would generally only apply these penalties where an employer is consecutively and repeatedly late. There will also be fines for lodging false or misleading reports.

ATO has suggested that such penalties would “generally” only apply when the employer has not resolved the error “within a reasonable time frame.”

“The STP law allows for the commissioner to provide a period of grace for an employer to correct a mistake without penalty; as such, we would generally only apply penalty where an employer knowingly reports incorrect information and does not correct it within a reasonable time frame — usually that period is 14 days.”

According to the Tax Office’s spokesperson, its attention remains on assisting smaller businesses to become STP compliant, restating that these employers will not face penalties for mistakes or missed lodgements over the next 12 months.

Although the small and micro business has started reporting their payroll and superannuation information via STP system on 1 July, there will be a three-month grace period until 30 September. There is also a 12-month waiver for closely held employees, including immediate family members.

Despite these extensions, businesses must begin their STP reporting as soon as they can, rather than leaving things to the last minute or taking a disorganised approach according to different types of employees. Here in PJT Accountants and Business Advisors, we recommend setting up STP as soon as possible in your business, we would be delighted to assist your business in setting this up and your year-end payroll finalisation.

For more information on STP, contact PJT Accountant and Business Advisors we would gladly explain and help you on your STP queries and implement this in your business.