Australia Legislates Real Time Reporting System, Proposes Tax Break

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By Jared Mondschein and Molly Ward

Sept. 1—A new electronic system that would introduce real time tax and superannuation reporting and payment requirements for Australian employers, known as Single Touch Payroll (STP), was submitted for parliamentary approval Aug. 31.

Included in Budget Savings Bill 2016, STP would limit manual reporting of Pay As You Go withholding and superannuation contributions to the Australian Tax Office (ATO) and instead require many employers to electronically report the information through government-approved software. Employers also would have the option to pay their withholding at the same time as they pay their employees in the new system.

Under the proposed legislation, STP would become available for use July 1, 2017. Starting July 1, 2018, employers with 20 employees or more employees would be required to report using the STP system. The legislation does not contain any requirement for employers with 19 or fewer employees.

The ATO issued a consultation to discuss how it intends to apply the new system as proposed in the legislation. Responses to the consultation must be submitted by Sept. 30, 2016.

The Single Touch Payroll concept was first introduced by the Australian government in late 2014, with the goal of implementing the system by July 2016, but the government altered its plans after significant complaints from businesses due to the short implementation time frame and limited cash flow that mandatory real time payment would cause.

Middle Class Tax Break

Separately, the threshold for the middle income tax bracket of 32.5 percent would increase to A$87,000 ($65,720) from A$80,000 ($60,432) under Treasury Laws Amendment (Income Tax Relief) Bill 2016 submitted for parliamentary approval Sept. 1.

If passed, the new threshold would be retroactive from July 1, 2016.

The ATO plans to issue new income tax withholding schedules once the Commissioner of Taxation is confident that Parliament will pass these amendments, according to a Sept. 2 news release on the Australian Treasury Department's website.

To contact the reporters on this story: Jared Mondschein at jmondschein@bna.com and Molly Ward at mward@bna.com

To contact the editor responsible for this story: Michael Baer at mbaer@bna.com

For More Information

The Budget Savings Bill 2016, including the explanatory information, is available at http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5707.

Text of the Treasury Laws Amendment (Income Tax Relief) Bill 2016 can be found at https://www.legislation.gov.au/Details/C2016B00086.

A Sept. 1 news release on the increased threshold for middle income tax bracket can be found at http://sjm.ministers.treasury.gov.au/media-release/076-2016/.

A Sept. 2 news release on issuing new PAYG withholding tax schedules can be found at http://sjm.ministers.treasury.gov.au/media-release/088-2016/.

More information on payroll issues in the Australia can be found in the Australia country primer.

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