New Single Touch Payroll for small business has ‘significant ramifications’

New Single Touch Payroll for small business has ‘significant ramifications’

Payroll

Dates have now been locked in for small businesses to commence Single Touch Payroll, but there are resounding concerns about the cost and compliance burden this will impose.

As part of a package that will give the government increased funding and penalty powers with instances of non-compliance with employee benefits, the introduction of STP will now apply to employers with less than 20 employees from 1 July 2019.

Employers with more than 20 employees will transition to STP from 1 July 2018.

The Institute of Public Accountants (IPA) is demanding that the government show the cost benefit analysis of bringing STP within the now set time frame for SMEs.

“The government conducted a pilot program and we have been waiting for the results to prove the cost benefit analysis of introducing the program, especially in relation to how it impacts SMEs,” said IPA chief executive Andrew Conway.

“The 1 July 2018 introduction of STP for employers with more than 20 employees followed by 1 July 2019 for those entities employing less than 20 employees, comes with significant ramifications for all employers.

“The digitisation of small business is a priority for their future business growth and competitiveness; that means a financial outlay which many may struggle to meet.

“We are therefore keen to see the details of incentives that the government will provide to small business to transition to STP.”

Mr Conway also knocked back suggestions - commonly spouted from the government - that STP will reduce the regulatory burden for small businesses.

“Small businesses already face considerable compliance issues; STP will just add to the load with mandatory pay period-based reporting,” he said.

“Many businesses not geared to make the transition will need to further engage with their trusted advisers; their accountants and bookkeepers to help meet their compliance needs,” he said.

However, associations such as the Institute of Certified Bookkeepers (ICB) are on board with the broader rollout of STP.

"The design work that is occurring between software companies, industry, employers and the ATO should ensure that the ATO will achieve Superannuation visibility with minimal disruption to an employer's process. An employer's first priority will be paying their employees and the STP system can't put a barrier to that payment,” executive director for the ICB, Matthew Addison, told The Bookkeeper.

“STP should result in all employers being monitored to ensure they are meeting their obligations. A good outcome would be that all employers are compliant and meeting their superannuation payment obligations, finally through STP reporting and the funds having to report the payments received, the ATO will have visibility of what is going on,” he said.

New Single Touch Payroll for small business has ‘significant ramifications’
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