The tax office has confirmed that it will not force microbusinesses to buy payroll software, which had been a key concern over the impending rollout of Single Touch Payroll to smaller employers.
Single Touch Payroll (STP) is the ATO’s new framework for employers to report payroll data. It took effect for larger employers (those with 20 or more employees) from 1 July this year.
Legislation to extend it to smaller employers, bringing consistency among all businesses, is still before Parliament. It is tentatively slated to commence from the start of next financial year (1 July 2019).
Head of policy at the Institute of Public Accountants, Tony Greco, previously told My Business that STP could be a disaster for microbusinesses – those that employ between one and four people – given many do not have, and often cannot afford, payroll software required for digital reporting.
Many do their pay calculations on the “back of an envelope”, he said, and the change could force them to reduce the frequency with which they pay their staff.
Instead of forcing all employers onto payroll software, the ATO is seeking expressions of interest (EOI) from digital service providers to “develop tailored STP solutions for the micro employer market”.
Acknowledging that many small businesses, and particularly microbusinesses, would struggle to be compliant with STP in its current form, the ATO is looking to technology companies to build solutions that address business concerns over cost, time of use and capabilities.
“Around 390,000 of these businesses appeared not to be currently using payroll software and around 100,000 had little or no digital experience,” it said in the EOI tender documents.
Under the plan, service providers would need to provide a low-cost or free solution to employers (capped at $10 or less per month) and incorporate simplified functionality.
“While the ATO is unable to provide funding for the development of the solutions, the offer is to collaborate by way of ATO services and expertise and facilitate the bringing of these solutions to market, preferably by 1 July 2019,” the documents state.
“The ATO intends to establish a public register of candidate solutions (‘the register’) to assist in informing micro employers and the business adviser community of these options.”
In July, a poll on the My Business website revealed that almost one in five business owners have no idea what STP is, let alone how its rollout will impact them.
In August, one business owner claimed that they were forced to change accounting software in order to be compliant with STP rules. However, both the software provider and Mr Greco denied that businesses had to change providers against their will.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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