The ATO has silently dropped the eligibility conditions for employers who authorise registered agents to act on their behalf for STP through an annual agreement, in a move that is a win for small businesses
This written agreement, called an STP engagement authority allow a registered agent to prepare pay events (process payroll for a business) and declare those pay events to the ATO over a period of time.
Previously, an employer could only provide an STP engagement authority if they did not –
- have any overdue activity statement lodgments
- have any outstanding debts, unless they are covered by a payment arrangement or subject to review
- currently be, or have been within the last two years, the subject of ATO compliance activity for PAYG withholding
- have a company director who has been issued with a Director Penalty Notice (DPN) in relation to this company or any other company where they are or have been a director
What this meant in practice is that without a standing authority, you were required to file a STP pay event form each pay run with a declaration that the information was true and correct, and that you were authorised to lodge it
These eligibility conditions have since been dropped from the ATO website, in line with changes passed in Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Bill 2024 to simplify the STP declarations. The section on STP engagement authority has been expanded to provide more clarity around the how the agreements work
The engagement authority can cover multiple pay event lodgments and ends at the earlier of:
- 12 months after the engagement authority was given to the registered agent
- the day the agent is notified that the declaration is withdrawn by the employer, or
- the day the agent becomes aware there has been a material change in the relationship between the employer and the agent or in the affairs of the entity since the declaration was made.
For an STP engagement authority to continue beyond that time, a new one needs to be made.
Material changes include, but are not limited to, changes to:
- the agent relationship (ending the engagement or changing the level of the agent’s responsibilities)
- the agent’s status (for example, there is a change to the status of the agent’s Tax Practitioners Board registration through termination, suspension or other sanctions)
- the business environment that results in a significant change to how the employer completes reporting obligations (for example, changes to the payroll software used), or
- the law or policy applying to STP reporting (for example, if the employer was required to report additional amounts or if significant changes to the approved forms for reporting are made)
The changes represent a pragmatic shift in policy and make it simpler and easier for businesses to engage registered agents to process payroll and file STP pay events on their behalf, by not penalising businesses who may be struggling
For more information see the ATO website
