Australia – Single Touch Payroll: Shadow Payrolled Employees Working in Australia

Australia – Single Touch Payroll: Shadow Payrolled Empl

This report covers the impact on employers of certain foreign employees in Australia of the termination of the exemption from Single Touch Payroll (STP) reporting.



To subscribe to GMS Flash Alert, fill out the subscription form.

An exemption for employers from Single Touch Payroll (STP) reporting in respect of certain foreign employees working in Australia will no longer apply from 1 July 2019.

The Australian Taxation Office (ATO) has announced that effective 1 July 2019, this exemption will cease and employers will be required to include these foreign employees in their Australian STP reporting. 


STP reporting requires that employees’ payroll information, including salaries and wages, pay-as-you-go (PAYG) withholding, and superannuation contributions, be reported to the ATO on a “real-time” basis when paying employees.

Employers who have “foreign payrolled” employees working in Australia (including those with PAYG withholding variations in place) will now need to make sure they have processes in place in order to satisfy their Australian STP reporting requirements. 

The ATO has the power to impose significant penalties where these requirements are not met, and deny deductions for payments made to employees where employers have failed to meet their STP reporting and PAYG withholding obligations.


During the first year of Single Touch Payroll (STP), employers were exempt from STP reporting requirements for certain foreign employees seconded to Australia, where they were paid from a foreign payroll.

Concession for Foreign Payrolled Employees – Later Due Dates

While payments are normally required to be reported for STP purposes on or before each pay day, a slight timing concession will apply for foreign payrolled employees whereby the reporting due date will be up to one month later. This is in recognition of the challenges that employers may face in obtaining this information from foreign payrolls on a timely basis.

Additionally, for the year end 30 June 2020, the ATO will defer the due date for submitting the end-of-year STP finalisation (i.e., year-end reconciliation) until 14 September 2020, for those inbound employees to Australia who are paid wholly or partly from a foreign payroll.


Interaction of STP Requirements with PAYG Variations to Nil

The STP reporting requirements are separate and distinct from the PAYG withholding requirements. 

For those employers who have obtained the Commissioner’s approval to vary an employee’s PAYG withholding obligations to nil, current ATO commentary2 suggests that STP reporting will still be required.  This means that the company will still be required to report the income (and superannuation where applicable) each pay event.

Practically, however, the fact that a PAYG variation is in place will typically mean that the Australian payroll is not used, making compliance with STP reporting obligations extremely challenging and onerous.

Further consultation with the ATO will take place in late March to provide clarity on this point.

Next Steps

Employers will need to review their Australian employee population being paid from a foreign payroll and make sure a process is in place by 1 July 2019 to manage this additional STP reporting obligation. 

Subject to the outcome of the ATO consultation in March, employers with PAYG withholding variations to nil may also need to revisit arrangements to determine if a shadow payroll is a more appropriate process under the STP regime.

STP will provide the ATO with much greater transparency over payroll and superannuation compliance for inbound employees on foreign payroll.  Employers should therefore also consider if a broader review of policies and processes is required for on-boarding these employees including:

  • Visa appropriateness;
  • Collection of Tax File Number (TFN) Declarations (timely lodgment and associated PAYG withholding obligations);
  • Timely capture and compliance of short-term inbound business travelers;
  • Analysis of foreign wage codes to help ensure they are correctly set up for STP reporting, PAYG withholding, superannuation, payroll tax, and workers’ compensation obligations;
  • Continuing appropriateness of PAYG variations to nil where STP reporting is required for this employee population.

We recommend all employers with employees working in Australia who are on a foreign or split payroll consult with their qualified tax professionals on how best to prepare for these STP changes.  

KPMG Australia can help employers efficiently deliver STP compliant shadow payrolls using its Shadow Payroll Assist technology (for more information, click here).


1  The new guidance is not yet posted on the ATO Web site.  For additional information on Single Touch Payroll, click here.

2  See the ATO Web page “The Rules of Reporting through Single Touch Payroll.”


Dan Hodgson

Perth, Western Australia

Partner – People Services

Tel. +61 8 9278 2053

Mobile: +61 416 017 131


Mardi Heinrich

Melbourne, Victoria

Partner – Deals, Tax & Legal People Services

Tel. +61 3 9838 4348

Mobile: +61 410 602 993


Ablean Saoud

Sydney, New South Wales

Partner – Deals, Tax & Legal People Services

Tel. +61 2 9335 8550

Mobile: +61 421 052 596


Hayley Lock

Brisbane, Queensland

Partner – People Services

Tel. +61 7 3434 9176 

Mobile: +61 477 764 638


Jackie Shelton

Sydney, New South Wales

Partner – Deals, Tax & Legal

Tel. +61 2 9335 8511

Mobile: +61 477 764 638

The information contained in this newsletter was submitted by the KPMG International member firm in Australia.

KPMG Australia acknowledges the Traditional Custodians of the land on which we operate, live and gather as employees, and recognise their continuing connection to land, water and community. We pay respect to Elders past, present and emerging.

©2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

For more detail about the structure of the KPMG global organisation please visit

GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Connect with us

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today