Single Touch Payroll
The government announced recently a new initiative called Single Touch Payroll. It aims to cut red tape for employers by simplifying tax and super processes. It aims to benefit the ATO (and therefore the taxpayer) by providing them with more data and in a more real-time manner.
Single Touch Payroll will also streamline aspects such as Tax File Number declarations and Super Choice forms.
Much is still not known about Single Touch Payroll. So, while the employer's payroll software will automatically transmit the payroll data to the tax office, will employers be required to also pay their tax off to the ATO at the same time? Will employers be required to pay their super off each period at the same time as payroll? To read more about the rationale underpinning this new initiative click on the discussion paper.
The ATO requested feedback which we provided (see our position below).
I'm still interested in hearing what you have to say as there will be further opportunities to feed back.
What would it mean to you if you had to pay your PAYG witholding and super payments at the same time as payroll? Would not having to do activity statements anymore, nor payment summaries, be a significant reduction in your administration? How benficial would the removing of new starter forms be (employees would log in to a government portal to input their info)?
Our position on Single Touch Payroll
We believe there is great merit in taking advantage of technology to streamline processes. For the 30+ years Crawshay Consultants have been providing payroll services throughout Melbourne and Australia we have adapted, grown and greatly improved by embracing proven and secure digital technologies. Whilst digital security needs to always be at the forefront of any new data initiatives, it is hard to imagine a business system in 5 or 10 years time that hasn't further evolved and become more efficient from the practices of today. However.....
Whilst Crawshay Consultants now has a very broad base of industries that we provide payroll services to, we still maintain a strong association with Hospitality and Retail industries. It is well known that industries such as Hotels, Restaurants, Cafes, Retail, Clubs, etc all live in a very variable and often cyclical environment. The prospect of real-time payments of PAYGW and super at the same time as payroll is one that would send a shudder through many of these businesses. It is difficult enough for any business to survive, without introducing new requirements that will shift the goal posts for a company's cash-flow position.
We believe it's highly likely that Single Touch Payroll will initially involve just real-time information, and not real-time payment. If or when real-time payment is introduced it risks being mired in concessions or phasing in arrangements that would need to be set out for businesses to help manage their cash flow.
The UK has just gone live with their Real Time Information (RTI) (not payment) requirements, with penalties for non-compliance.
We are very concerned about the reconciling that all parties would need to carry out to balance the periodic data to any later monthly or quarterly payments. There are finer points such as SG thresholds that will complicate this. An unintended consequence might be that red tape increases at the business and ATO level if payment is not at the same time as data.
We support the opening up of digital channels to employees to submit their personal information. Many people now find it easier to go online to submit their personal information, rather than repetitively filling out paper based TFN and Super Choice forms. There will obviously be support and other options for when online is not possible or appropriate.
Finally, we support the government's attempt to level the playing field. If providing data on a real time basis helps ensure that employers stay on top of their PAYGW and super obligations then we support this. As we've blogged before in respect of paying Super - it isn't fair that while some employers pay their obligations in a timely fashion, others (often for very understandable reasons) might fall many months behind in their payments. Sometimes these companies are wound up, leaving employees, and then the taxpayer, out of pocket, while some employers are then able to re-structure their finances in complex and intricate arrangements.
We sincerely hope that any changes are well detailed and communicated, and that the complete underlying rationale is very well explained to the business community. Otherwise it will be seen as a grab for data with little real reduction in administration and little tangible benefits.