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‘Biggest change since GST’: Businesses not ready for digital payrolls

Australian businesses will move to mandatory digital payroll reporting on July 1 and there are warnings many operators are not prepared for what is being called one of the biggest changes to business operations since the GST was introduced.

From July 1, all Australian employers will be required to report pay and superannuation information to the Australian Taxation Office in one click via single-touch payroll systems.

Workers will be able to access their group certificates through their MyGov account or through Australian Taxation Office online services.

The change means employers will have to upload the data online rather than email or post an employee’s end-of-year payment summary or group certificate.

However, a study from small business accounting firm Xero found that despite the system becoming mandatory in a matter of weeks, one in five employers they surveyed said they did not believe the system applied to them.

The survey of 300 businesses found one third didn’t think the term “digitisation” applied to their business, while one in 10 weren’t yet compliant with the new systems.

“I think a lot of us look at this and see it as the biggest change to impact small businesses since the change [introduction] to GST in 2000,” said Xero head of industry Matthew Prouse.

“But once single-touch payroll is embedded in the workflow, it is just one button.”

However, general manager of technical policy at the Institute of Public Accountants, Tony Greco, said it was not surprising businesses were still ignoring single-touch payroll even as the deadline approaches.

“There’s been a bit of ‘put your head in the sand’ thing — it hasn’t resonated,” Mr Greco said.

It will be critical that businesses communicate with their staff this year about end of year payment summaries used for income tax returns, he said.

“Those that are in single-touch payroll have an obligation to say, ‘we’re not giving you a payment summary this year – go to MyGov and print it off’,” Mr Greco said.

Getting systems up to speed

The Tax Office has been educating business owners across the country about the new systems and more than 40,000 businesses had logged on as of last year. 

The ATO has said it would not penalise companies for mistakes they might make when using digital payroll for the first time, however businesses are compelled to use the systems from July.

Accounting experts have previously warned smaller operators to make sure their superannuation payments are made to staff on time, because for the first time the ATO and employees will be able to see quarterly updates on how much superannuation has been paid.

While small business accounting firms including MYOB and Xero have compliant payroll offerings, there are also free tools on offer, meaning companies do not have to pay for software to get up to speed. The tax office has a list on its website of no and low-cost processing apps.

“We understand that many small businesses and other small employers do not currently use commercial payroll software and they will not be required to purchase such software to report under STP,” ATO commissioner Chris Jordan said in a statement to business owners earlier this year.

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Source WA Today

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