PAYG Withholding annual reporting exemptions: Single Touch Payroll optional year

Administered by Department of the Treasury

Legislation au F2018L00494 Not in force Legislative Instrument

Legislation content

Explanatory Statement

 

PAYG Withholding annual reporting exemptions: Single Touch Payroll optional year

 

 

General Outline of Instrument

  1. This instrument is made under subsection 16-153(6) and section 16-180 of Schedule 1 to the Taxation Administration Act 1953.
  2. This instrument exempts an entity from its obligations to provide payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant information has been reported under Single Touch Payroll.
  3. The instrument is a legislative instrument for the purposes of the Legislation Act 2003.
  4. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Date of effect

5.      The instrument commences on the day after its date of registration on the Federal Register of Legislation.

What is this instrument about?

6.      Single Touch Payroll is a new system for the reporting of employee payroll and superannuation information by certain entities. Division 389 of Schedule 1 to the Taxation Administration Act 1953 provides the basis for these new reporting arrangements.

7.      From 1 July 2018, Single Touch Payroll reporting will be mandatory for ‘substantial employers’, as defined in subsection 389-5(6) of Schedule 1 to the Taxation Administration Act 1953.

8.      Entities that report under Single Touch Payroll from 1 July 2018 are exempted from providing payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant payments have been included in Single Touch Payroll reporting.

9.      Single Touch Payroll reporting will be available prior to 1 July 2018 and entities are being encouraged to enter the system on a voluntary basis if they are using a compatible payroll solution. A list of compatible payroll solutions will be accessible through the ATO website.

10.  This instrument extends the exemption from Pay as you go (withholding) payment summary and annual reporting requirements to those entities that enter the system prior to 1 July 2018, to the extent that amounts that would otherwise be required to be reported on a payment summary and annual report are fully reported through Single Touch Payroll.

What is the effect of this instrument

11.  The exemptions provided under this instrument ensure that entities that voluntarily enter the system prior to 1 July 2018 will experience the full benefits of reporting under Single Touch Payroll.

12.  In particular they will be relieved of payment summary and annual reporting obligations that would require them to report the same information twice.

13.  However, entities that are required to withhold from payments that they do not report through STP will still be required to give payment summaries to recipients in relation to those payments and a payment summary annual report to the Commissioner. This includes both payments to a recipient that an entity does not fully report through Single Touch Payroll for the year and payments that cannot be reported through an entity’s payroll solution.

14.  An assessment of the compliance cost impact indicates that the impact will be minor for both implementation and on-going compliance costs. The new instrument is of a minor or machinery nature.

Consultation

15.  The reporting requirements have been developed through a long period of consultation with payroll software developers and bodies representing payroll users.

 

 

Legislative references:

Acts Interpretation Act 1901

Taxation Administration Act 1953

Legislation Act 2003

Human Rights (Parliamentary Scrutiny) Act 2011

Statement of Compatibility with Human Rights

 

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

PAYG Withholding annual reporting exemptions: Single Touch Payroll optional year

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

The instrument provides an exemption for an entity from its obligations to provide payment summaries and annual reports under the Pay as you go (withholding) system to the extent that the relevant information has been reported under Single Touch Payroll.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a minor or machinery nature.

Conclusion

This legislative instrument does not raise any human rights issues.

 

 

 

Overview

The PAYG Withholding annual reporting exemptions: Single Touch Payroll optional year instrument, made under the Taxation Administration Act 1953, aims to streamline reporting obligations for certain entities by exempting them from providing payment summaries and annual reports under the Pay as you go (withholding) system if they report relevant information through the Single Touch Payroll (STP) system. This instrument was enacted to address the problem of duplicate reporting requirements, ensuring that entities that voluntarily enter the STP system prior to its mandatory commencement date on 1 July 2018, benefit from reduced administrative burdens. The instrument was developed following extensive consultation with payroll software developers and representatives of payroll users, reflecting a commitment to ease compliance costs while maintaining necessary reporting standards. The exemptions provided under this instrument alleviate the double reporting burden on entities that fully utilise the STP system, although entities withholding payments not reported through STP must still provide the requisite payment summaries and annual reports.

Scope and Application

This instrument, made under the Taxation Administration Act 1953, exempts entities from their obligations to provide payment summaries and annual reports under the Pay as you go (withholding) system if they have reported the relevant information through Single Touch Payroll. Specifically, entities that voluntarily adopt the Single Touch Payroll system before the mandatory commencement date of 1 July 2018 are exempt from the payment summary and annual reporting requirements, provided that all relevant payroll information is included in their Single Touch Payroll reporting. This exemption aims to alleviate the administrative burden on businesses by preventing the need to report the same information twice. However, entities that withhold from payments not reported through Single Touch Payroll will still need to provide payment summaries and annual reports for those payments. The instrument is designed to be of minor or machinery nature, indicating that its impact on compliance costs is expected to be minimal.

Key Provisions

The main operative sections of the instrument (subsections 16-153(6) and 16-180 of Schedule 1 to the Taxation Administration Act 1953) establish an exemption from certain obligations under the Pay as You Go (PAYG) withholding system. Specifically, these sections exempt an entity from providing payment summaries and annual reports under the PAYG system if the relevant information has already been reported through the Single Touch Payroll (STP) system. This means that if an entity is already reporting payroll and superannuation information through STP, it does not need to provide additional payment summaries and annual reports for the same information under the PAYG system. The instrument imposes obligations on entities that choose to report through STP. Entities that decide to enter the STP system on a voluntary basis prior to the mandatory start date of 1 July 2018 will be exempt from the PAYG withholding payment summary and annual reporting requirements, provided that they fully report all relevant payments through STP. This includes payments made to recipients that the entity does not fully report through STP for the year and payments that cannot be reported through the entity's payroll solution. Additionally, entities that are required to withhold from payments that they do not report through STP will still need to provide payment summaries to recipients and an annual report to the Commissioner for those payments. In terms of consequences for non-compliance, the instrument does not explicitly state specific offences, penalties, or civil/criminal consequences for breach. However, entities that fail to comply with the STP reporting requirements may still be subject to penalties under the PAYG withholding system for not providing accurate payment summaries and annual reports where required. The instrument notes that the compliance cost impact is expected to be minor, indicating that the legislative changes are intended to be administrative rather than punitive. Entities must ensure that they fully report all relevant payments through STP to avoid any potential penalties or compliance issues.

Legal classification tags

Area of Law
Taxation Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Compliance Obligations
Reporting & Disclosure Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.