The ATO has weighed in on concerns about employers using outdated and not fit-for-purpose payroll software, amid a “significant increase” in complaints from workers about unpaid super.
The Australian Payroll Association expressed its concerns about program updates, suggesting that 80 per cent of businesses have not updated their payroll software since 2000, and that many larger employers are still using software that was specifically designed for small businesses.
One My Business reader suggested that it is hardly surprising most employers aren’t updating their software regularly.
“Not all software is updated constantly. Just look at the banks and government systems. There will have been patches to comply with law changes,” the reader commented.
“Big systems change slowly, as does industry-based software. If your payroll was written around or part of a car industry or motel industry then often only minor changes have to be made (most employees fit into a small section of awards etc.).”
It comes just as the volume of complaints from employees to the ATO about unmet super obligations has surged dramatically, as outlined this week to My Business sister title Accountants Daily.
The ATO said that it is now “applying more resources to these cases”, with 1,129 businesses already issued with 1,550 Director Penalty Notices worth $101 million in just four months (July to October 2019).
Accountants Daily reported that the ATO did not disclose the exact volume of complaints it is dealing with.
STP prompting review of applications
The ATO has since offered its response to the association’s findings, suggesting that the rollout of Single Touch Payroll (STP) reporting has prompted many employers to review their payroll processes and programs.
“Some industry feedback is that the transition to STP acted as a prompt for employers to review their payroll requirements before deciding on the appropriate solution to meet their STP obligations,” a spokesperson told My Business.
“We are finding that employers are using a range of products that are available in the market; however, the choice of product is an individual business decision, based on what best suits their business circumstances.”
According to the spokesperson, the ATO has observed small businesses updating their payroll software as they transition to the new digital reporting system.
“In the business visits conducted by our teams, we are seeing small business employers adapt to STP reporting and updating their payroll software,” the spokesperson said.
“Those without software are generally engaging with their tax professional to get advice on the right solution for them, which could include having their agent report on their behalf or finding a low or no-cost option.”
4 in 5 STP reports correct, mostly on time
Latest figures from the ATO are that two-thirds of employers are now reporting their payroll data digitally through the STP system, with 550,898 employers (67 per cent) doing so as of 24 November 2019.
Small businesses (those with between one and 19 employees) make up the bulk of this, at 468,410 employers reporting through STP, alongside 82,488 “substantial” employers (those with 20 or more employees).
And most of these reports are being done correctly, the ATO confirmed to My Business.
“From the STP pay events that have been lodged, 82 per cent have not triggered any exceptions and most STP reports are lodged on time,” its spokesperson said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
ATO’s 37% tax on Christmas festivities
By George Morice
Performance anxiety not just a bedroom thing
By Dr Louise Mahler
Accommodating older workers ‘not hard, just different’
By Kim Seeling Smith