While single touch payroll has kicked in for businesses with 20 or more employees, legislation to extend it to 19 or less employees has yet to be passed.
Appearing before the House of Representatives Standing Committee on Economics, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell said small businesses were nowhere near ready for the extension of STP.
“In meetings I've had with small business people, I’ve asked them how many of you have got a payroll system because you need a payroll system to run this and half of them will often say no,” said Ms Carnell.
“Even ones that have got small business software haven't got the payroll module. They haven't because they've only got three employees and it is pretty easy to use a book you buy from the newsagent, or a spreadsheet in Excel, they don't perceive they need one and yet with STP in its current form, they will need one.”
Further, ASBFEO principal adviser Anne Scott said the extension of STP would add cost and time to small business owners who would be required to purchase appropriate software and learn how to use it.
“If you talk to the banks, 45 per cent of the small businesses they see don't have any form of accounting software and so we're coming in with STP which is a great initiative and will streamline data provision to the ATO but how are we going to get over that barrier which is small businesses investing in software that they can use to run that financial side of their business,” she said.
The Institute of Public Accountants (IPA) has been vocal on the extra compliance burden STP will place on small businesses, and has called for a “phased and targeted incentive approach” in rolling it out.
“Our concern is for the 70,000 small businesses that have been identified that will struggle to implement STP without help and support. Many of these businesses are not digitised and will require adoption of technology and education,” said IPA chief executive Andrew Conway.
“For small and micro businesses employing less than five people to implement STP before 1 July 2019, [it] will take considerable incentive and support.
“We support the notion of a phased and targeted incentive approach as proposed by the Government.”
Earlier this year, the government announced a 12-month amnesty period for historical underpayment of the superannuation guarantee, in anticipation of the full implementation of STP.
The ATO had earlier said that the deadline for STP would not change, nor would there be mass deferrals, despite struggles from the industry and software providers.