From 1 July 2019, Single Touch Payroll requirements will be applied to businesses with 19 or fewer employees - a year after larger business will be required to comply. The change is designed to streamline reporting and help with enforcement of employee benefit laws.
While on the surface the change seems to be for the better, the inclusion of SMEs in Single Touch Payroll has been met with concerns regarding cashflow.
Could the 2019 changes have any major effect on your business? Find out below.
What is Single Touch Payroll?
Standard Business Reporting software will be required for employers to complete payroll events and have those payments reported.
Single Touch Payroll (STP) is a government initiative created with the intention of optimising individual employer reporting to the ATO. Under STP, businesses will be required to report salary or wages and pay-as-you-go withholding amounts at the same time they pay employees. Contributions to relevant super funds must also reported at the time of payment.
Standard Business Reporting-enabled software will be required for employers to complete payroll events and have those payments simultaneously reported to the ATO.
The digitising and streamlining of the payroll process will mean that no end-of-year tax summary is necessary, and employees gain better access to information regarding their year-to-date tax position.
The changes also mitigate some of the risks associated with double handling data, a common concern in paper-based payroll reporting.
How does Single Touch Payroll affect my SME?
By combining the processes of payment and reporting into one transaction, STP aims to cut red tape for SMEs.
The impact of STP is not entirely positive however. The Institute of Public Accountants (IPA) has demanded that the government make public the cost-benefit analysis of applying STP to SMEs.
IPA Chief Executive Andrew Conway explained worries that rolling out mandatory STP-supportive software may result in outlay costs SMEs could struggle to pay.
For many SMEs, outstanding invoices could present considerable roadblocks on the way to complying with STP requirements.
"Small businesses already face considerable compliance issues; STP will just add to the load with mandatory pay period-based reporting," Conway said.
There is concern that with STP in place, employers could, in future, be made to pay PAYG and super contributions concurrently with standard wages or salary, rather than at the end of the relevant reporting periods.
How can I avoid payroll troubles?
For many SMEs, outstanding invoices could present considerable roadblocks on the way to complying with STP requirements. Updating software and transitioning to more frequent PAYG and super contributions could cause major financial hardship for your business.
When unpaid invoices are stopping you from updating your payroll software, Earlypay is here to lift the burden. Get in touch with us today to discuss your personalised finance solutions.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].