Close to one in five business leaders have no idea about Single Touch Payroll, My Business can reveal, despite the ATO’s flagship reporting system already being live for many employers.
In a straw poll conducted on the My Business website between 5 July and 30 July 2018, a concerning 18.3 per cent claimed to not know anything about Single Touch Payroll (STP), responding with “what’s that?”
Furthermore, of those who did know about STP, more said that their business was not ready for it than those who said their business was (42.4 per cent compared with 39.4 per cent).
“The results don’t surprise us that people aren’t as ready as one might suggest,” said Tony Greco, general manager of technical policy at the Institute of Public Accountants.
“There’s already a large number of organisations that have sought deferrals – even some of the large organisations are having trouble meeting the deadlines, and in some ways, the larger ones have customised software that they have to rejig to talk to the ATO.”
Despite these existing challenges, Mr Greco told My Business the biggest problems are still to come when STP is extended to businesses with fewer than 20 employees.
“We’re more concerned about the micro[businesses],” he said.
“It’s not law yet – it’s caught up in parliament – but there is a bill that will hopefully make it mandatory for all employers to come on board. So I think a lot of people are waiting for it to become law.”
Debate over effectiveness of new reporting framework
Prior to the 1 July 2018 launch date for STP reporting for businesses with 20 or more employees, there was considerable debate and confusion about what, if any, impact it would actually have on finance teams and business accountants.
Some, such as bookkeeper Don Grgic, claimed it was a “bureaucratic nightmare” that would result in a tenfold increase of the existing compliance burden on employers.
Others, including Sage senior executive Simon Berglund, labelled such concerns as nothing more than a beat-up and scaremongering.
Most of the major accounting software platforms, including MYOB and Reckon, updated their systems ahead of the rollout date. Others failed to meet the 1 July deadline and were forced to request an extension from the tax office.
Employers continuing to struggle with the reporting changeover by the relevant deadline can request a deferral from the Australian Taxation Office (ATO).
A 12-month amnesty was also proposed by the ATO on historical underpayment of superannuation guarantee obligations. Yet such an amnesty could result in employers inadvertently paying more than they need to, potentially impacting all-important cash flows.
Mr Greco suggested that, once fully installed and operational, STP will bring benefits of enhanced cash flow forecasting and better visibility of superannuation costs. Instead it is the transition itself that will deliver the biggest headaches.
“One of the deficiencies of the current system is that an employer has until three months after the end of the quarter to pay the SG, and by then they don’t even know [how much] they should be paying,” he said.
So what is Single Touch Payroll?
STP is a change in the way employers are required to report financial data about their workforce. Once fully implemented, employers of all size will directly report figures – including employee wages, pay-as-you-go withholding tax and super contributions every time a payment is made to employees.
This new standard took effect from 1 Jul, 2018, for all employers with 20 or more employees. Smaller businesses with fewer than 20 staff have been granted an additional 12 months to prepare for the transition, with reporting to take effect from 1 July 2019.
Veterans a smart choice for your business
By Adam Zuchetti
The business benefit: Going all-in on sustainability
By Adam Zuchetti
Analysis: How likely is an interest rate cut in June?
By Adam Zuchetti