Taxation Administration – Single Touch Payroll – 2020-21 year Portable Long Service Leave and Portable Redundancy Scheme Providers Exemption 2020

General Outline of Instrument

1. This Taxation Administration – Single Touch Payroll – 2020-21 year Portable Long Service Leave and Portable Redundancy Scheme Providers Exemption 2020 instrument is made under subsection 389-10(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA).
2. This instrument exempts certain entities which administer a Portable Long Service Leave scheme or a Portable Redundancy scheme from reporting under Single Touch Payroll (STP) in respect of amounts paid to members of the scheme(s).
3. This 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.                  This instrument commences on 1 July 2020.

6.                  For the purposes of subsection 12(2) of the Legislation Act 2003 this instrument does not adversely affect the rights or liabilities of any person other than the Commonwealth.

What is the effect of this instrument

7.                  This instrument provides a limited class exemption to entities which administer a Portable Long Service Leave Scheme or Portable Redundancy Scheme (Scheme providers).

8.                  Scheme providers will be exempt from the requirement to report under section 389-5 of Schedule 1 to the TAA during the 2020-21 financial year to the extent the amount is paid to a member of their respective scheme(s).

9.                  The effect of this instrument is to extend the limited class exemption for Scheme providers, provided by Taxation Administration – Single Touch Payroll – exemption for payments made to members by Portable Long Service Leave and Portable Redundancy Scheme Providers (F2019L00457) legislative instrument, registered on 29 March 2019 for an additional financial year.

10.              As a result, Scheme providers are not required to report payments (such as long service leave or redundancy payments) made to members of their respective scheme(s), as would otherwise be required by section 389-5 of Schedule 1 to the TAA, for the 2018-19, 2019-20 and 2020-21 financial years.

11.              As the exemption provided by this instrument is limited, Scheme providers are still required to comply with section 389-5 of Schedule 1 to the TAA to the extent an amount relates to payments that are not a benefit related to membership. For example, Scheme providers are required to report payments of salary made to their employees in accordance with section 389-5 of Schedule 1 to the TAA.

12.              An entity covered by this exemption may still choose to report amounts relating to members of their scheme(s) under Single Touch Payroll (STP) in accordance with Division 389 of Schedule 1 of the TAA notwithstanding the exemption provided by this instrument.

13.              An assessment of the compliance cost impact indicates that the impact will be minor for both implementation and ongoing compliance costs. The instrument is of a minor or machinery nature.

Background

14.              Division 389 of Schedule 1 to the TAA establishes STP reporting. Section 389-5 of Schedule 1 to the TAA provides for the reporting of certain amounts by employers to the Commissioner.

15.              Subsection 389-10(1) of Schedule 1 to the TAA allows the Commissioner of Taxation to exempt by way of legislative instrument a class of entities from reporting under Single Touch Payroll for one or more income years.

16.              Subsection 389-10(2) of Schedule 1 to the TAA provides that the exemption may be limited to the extent specified in the instrument.

17.              Subsection 389-5(5) of Schedule 1 to the TAA provides that section 389-5 does not apply to an entity to the extent (if any) that the entity is covered by an exemption under section 389-10 for the year in which the entity’s conduct occurs.

Consultation

18.              For this instrument, broad public consultation was undertaken for a period of 4 weeks to 4 May 2020.

19.              The draft instrument and draft explanatory statement was published to the ATO Legal database. Publication was advertised via the ‘What’s new’ page on that website, and via the ‘Open Consultation’ page on ato.gov.au. Major tax and superannuation publishers and associations monitor these pages and include the details in the daily and weekly alerts and newsletters to their subscribers and members. This ensures advice of the draft is disseminated widely across the tax professional community, and that they are in an informed position to provide comments and feedback.

20.              No comments were received as a result of the consultation.

Legislative references:

Acts Interpretation Act 1901

Human Rights (Parliamentary Scrutiny) Act 2011

Legislation Act 2003

Taxation Administration Act 1953

Statement of Compatibility with Human Rights

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

Taxation Administration – Single Touch Payroll – 2020‑21 year Portable Redundancy Scheme Providers 2020

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 of the Legislative Instrument

The Commissioner will afford an exemption to entities that administer a Portable Long Service Leave scheme or make payments of long service leave to members of the scheme. Additionally, Portable Redundancy scheme providers are not required to report termination of employment payments made to members of the scheme in the 2020-21 financial year. This will provide extra time to update software so that these employers/entities can be compliant with the Single Touch payroll (STP) reporting requirements.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms because it is of a minor or machinery nature as it provides certain entities with an exemption from a reporting requirement for the 2020-21 financial year.

Conclusion

This legislative instrument is compatible with human rights as it does not raise any human rights issues.