By Stephanie Pokrivka, Accounting Professionals
Single Touch Payroll (STP) has been introduced by the ATO to streamline employer reporting obligations but there may be deeper ramifications for your business if you are not prepared.
From 1 July 2019, each time you pay your employees you will also be sending wage, tax and super information directly to the tax office.
The new system will likely reduce the administrative burden for employers so the thought of not having to prepare end of year payment summaries is a win in my eyes.
However, the new way of reporting is just the first step in dramatically changing the system as we know it. The introduction of Single Touch Payroll will also provide the tax office with improved data matching capability and real-time payment obligations for employers.
These key changes may have a dramatic impact on your business if you are not prepared.
Improved Data Matching
Single Touch Payroll is the final piece of the puzzle for the ATO to have visibility over all employer obligations, specifically tax and super.
Let’s talk about super for a moment. In 2017, the ATO identified $2.58 billion in superannuation guarantee was not paid during the 2016 financial year. Non-compliance has been taken very seriously by the ATO and in this current financial year, 2,658 cases are planned to be closed, raising $134 million in liabilities.
Historically, the ATO has been able to see super payments but would only receive wage information for an employee after the end of the financial year when an employer reports.Now, each week, fortnight or month, you will be updating the ATO with real-time data. How quickly do you think the ATO will notice that you have missed a payment?
Even employees will have more visibility of their employer contributions through Single Touch Payroll via the myGov website. For any businesses that do not take their superannuation obligations seriously, rest assured the ATO will come knocking on their door very soon.
Real-time reporting and real-time payments
Moving forward, we expect to see a major shakeup in the way businesses currently lodge and pay their PAYG withholding and superannuation for employees.
With the introduction of Single Touch Payroll, it is inevitable that super and PAYG will be payable each week, fortnight or month along with your employee’s net pay.
At this stage, there is no guidance on when real-time payments for super and PAYG will start however, it is necessary for business to start thinking and planning for the cash flow impact now.
Are you ready for Single Touch Payroll?
If you, like many businesses, struggle with cash flow issues, now is the time to start making important changes within your business to plan for what is to come.
- Is consistent cash flow a current issue for your business?
- Does your business currently have a payment arrangement with the ATO?
- Do you consistently rely on payment plans for each activity statement?
- Do you currently have outstanding superannuation for employees?
Contact us to find out more about Single Touch Payroll solutions available to you.