Single Touch Payroll Reporting: 4 steps to get ready!
The pending introduction of the Australian Tax Office’s (ATO's) Single Touch Payroll Reporting (STPR) requirements from July 2018 will create significant changes for how businesses across the country report to and engage with regulators.
STPR: Real time, information sharing and super
Businesses that employ more than 20 people (headcount, not full-time equivalent) will be required to align with the new regime, which will see the ATO collect payroll data in real time. Compliance checking can also be completed in real time, which will start changing the way the ATO engages with taxpayers when issues arise.
The change could also affect the way payroll information is shared between other agencies, as it aligns with the ATO's current information sharing agreement. For example, the ATO could share real-time payroll data with an agency like Centrelink, instead of doing it a year after the fact.
Superannuation payments will also be affected by the new STPR system. For the first time, the ATO will be able to match an employee's superannuation fund payments to a payslip immediately, rather than waiting for an annual report from an employer with no guarantee the money actually makes it to individual super accounts.
The spotlight is on you
Statements by both the Fair Work Ombudsman and Offices of State Revenue highlight that, in the wake of the 7-Eleven case, regulators are particularly keen to review the franchisor's payroll and human resources (HR) systems and processes to determine whether they are both adequate and compliant.
Frequently, regulators are finding small and medium-sized enterprises (SMEs) have inadequate controls in place. When this occurs, they are going to audit the business, and possibly other businesses within the industry if they uncover systemic issues.
4 Steps to get ready now!
The majority of SME’s will make the 20 total employees threshold, a large portion of the market will be caught up by the changes. Savvy business operators are starting to prepare for the impacts now, by getting their payroll data and processes in order now so they can ensure future compliance.
Steps to prepare now:
- Have detailed conversations with your accounting software provider/s to confirm whether the current payroll processing arrangements will support the changes
- If you don’t use accounting software (eg you still rely on methods such as Excel spreadsheets) consider upgrading now to an automated system to improve efficiency!
- Conduct a risk review of your current payroll procedures, including PAYG, superannuation, car allowances and the timeliness of payments
- Review and monitor your HR processes to ensure employees are being treated fairly and paid correctly.
While the mandatory start date is 1 July 2018, there is an option for businesses to join voluntarily from 1 July 2017. BDO strongly advocates this option, as it will give Queensland businesses a significant head-start in ensuring compliance. Being proactive also means that if the ATO does review your business in the future, your management team can rest assured the business will have a strong track record to draw upon from the previous year.
Even if you decide not to proceed with the voluntary lodgements from this year, just being aware and beginning to plan ahead ensures you can be prepared early and not be caught off guard.
About the contributor:
Jason Daniels is a partner of Business Services at BDO in Brisbane. He is a qualified accountant, financial manager and business leader with more than 20 years’ experience. His expertise lies in all areas of financial management, especially mergers and acquisitions, business planning, forecasting, restructures, systems as well as process and operational improvement and software development. He holds a Bachelor of Commerce Degree, is a Member of Chartered Accountants Australia and New Zealand.