Single touch payroll

As reported in this month's Legislative Update, the Budget Savings (Omnibus) Bill 2016 was introduced and subsequently, a range of amendments to existing legislation. This includes the introduction of the Single Touch Payroll (`STP') reporting framework, for `substantial employers' to automatically provide payroll and superannuation information to the Commissioner of Taxation. Entities that report under STP will not have to comply with a number of existing obligations under the taxation laws.

Employers with 20 or more employees will be required to comply with STP reporting from 1 July 2018 and there is no Government decision at this stage to extend the regime on a mandatory basis to smaller employers. That said, the Australian Taxation Office (ATO) will be conducting a pilot in the first half of 2017 to demonstrate the deregulation benefits for businesses, with a focus on small businesses, to further inform the broader implementation of STP reporting.

On 31 August 2016, the ATO released a consultation paper outlining how the Commissioner intends to apply the new STP law. The ATO sought taxpayer input through the consultation paper to help keep taxpayer obligations under this measure as simple as possible. The ATO also sought taxpayer input to highlight any areas that are unclear, or cause difficulties in understanding taxpayer obligations. Responses to the consultation paper closed on 30 September 2016.

Fringe benefits affect certain income tests

The Budget Savings (Omnibus) Act 2016 also introduced changes to income tests for family assistance and youth income support payments, which will be calculated on the gross value of fringe benefits received rather than the net value of reportable fringe benefits, except in relation to fringe benefits received by individuals working for public benevolent institutions, health promotion charities and some hospitals and public ambulance services. These changes will come into effect on 1 January 2017.

New payroll tax harmonisation bill (Tasmania)

The Taxation and Related Legislation (Miscellaneous Amendments) Bill 2016 has been introduced into the Tasmanian Parliament and is currently before the Legislative Council. The Bill proposes amendments to a range of state taxes, including:

  • Amendments to ensure harmonisation with Victoria and New South Wales (NSW) in relation to the payroll tax treatment of owner-driver contracts and anti-avoidance provisions related to excluded contracts, and to remove the relevant contractor exclusions for insurance and door-todoor sales in line with NSW amendments
  • Amendments to the Taxation Administration Act 1997 to extend the standard reassessment timeframe from three to five years and extend a taxpayer's entitlement to a refund from three to five years.

Revenue Ruling PTA 040 Payroll Tax exempt superannuation contributions pre-1 July 1996 services (NSW)

The NSW Office of State Revenue has issued a new revenue ruling clarifying how the Chief Commissioner will apply the exemption for defined superannuation in respect of services rendered or performed by an employee before 1 July 1996, following the decision in Qantas Airways Limited v Chief Commissioner of State Revenue [2015] NSWSC 826.

The Revenue Ruling covers scenarios where the funds have a deficiency and where funds are in a surplus, and outlines the method of apportionment.

Payroll Tax Objection Time Limits (ACT)

In Australian Medical Council Ltd v Commissioner for ACT Revenue (Administrative Review) [2016] ACAT 105, the Civil and Administrative Tribunal overturned the decision of the Commissioner for ACT Revenue not to exercise discretion to allow late objections to payroll tax assessments.

The Tribunal held that denying the taxpayer an opportunity to test their case for payroll tax exemption would be unjust under the circumstances. Of relevance was the taxpayer's ignorance to the fact that they were not obliged to pay payroll tax and took actions to rectify the situation upon the issue being brought to their attention by their advisers.