My experience is that many clients want their tax returns done as soon in July as is possible, and like many suburban practitioners, my diary for July 2018 has entries already. In many practices, clients will, as they leave the office, book the same appointment time for 2018 as they had in 2017.
2018 promises a disruption to this smooth operation. Employers who are using single touch payroll (STP) are not required to issue a paper payment summary (PS). This, in fact, is the key selling point of STP – reduced paperwork for the employer.
Under the STP rules, the ATO receives the information every payday and builds a file on each employee. The ATO will make the total of income and tax withheld available via the pre-filling report.
Under the STP rules, an employer is required to confirm the STP details by 14 July each year; this is a month sooner than the date for lodging the paper report, but still halfway through the first month of the busy season.
The issue for the suburban tax agent is that there could well be a gap of two weeks before clients can start showing up to have returns completed. Historically, tax agents have been able to rely on the paper PS, which was often given to the employee within a few days of the last pay for the year. For instance, if the last fortnightly pay was on Thursday, 21 June, the PS might be handed out on Monday, 25 June, and the tax agent could get the return done then or in early July.
The STP rules mean that it might not be possible to get access to the total salary and PAYG (W) until after 14 July, when the electronic report reaches the ATO and has been processed by the ATO.
I foresee that many tax agents will have unhappy clients who in good faith show up for their early July appointment, but are unable to complete their tax returns. Tax agents will have to develop strategies to cope with these incomplete tax returns.
The corollary of this is that some clients will cancel appointments; some will not pay until the return has been completed, and others will have to make another appointment when the figures are eventually available from the pre-filling report.
This may, in turn, have a direct impact on the cash flow in accounting practices.
Tony Culberg, OAM, FIPA