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‘Get on board’: Single touch payroll required for all employers

Australian employers will have to put away their paper payroll ledgers for good, with parliament finally passing laws to mandate all businesses use single-touch payroll from July 1.

It’s welcome news for small business owners like Gloria Nguyen, who until last year was doing her payroll by adding numbers in a Microsoft Excel spreadsheet and then typing out payslips.

“I’d say it was taking me an hour each time — calculating the days, times and then checking earnings tax,” Ms Nguyen said.

All of this was for just two part-time employees at her Sydney massage therapy business Back on Your Feet which turns over under $100,000.

Ms Nguyen now uses Xero’s platform to generate digital payslips and she said Back on Your Feet will be ready for single-touch payroll.

Last year small business groups raised concerns smaller operators were not ready to digitise their systems. However, Ms Nguyen said the benefits of digital payroll systems for smaller operators include a reduction in the chance of errors and a decrease in the hours spent each week on paperwork.

“I guess you should just get on board with it. It actually makes life quite easy,” she said.

The passing of amendments to the laws in the House of Representatives on Tuesday extended the digital payments reporting scheme to employers with 19 or fewer staff from July 1. It also secured significant new powers for the tax office to force companies to pay outstanding super to staff.

Single touch payroll changes the way employers report their staff’s wages to the tax office by requiring businesses to report tax and superannuation payments to the ATO at the same time that they run their payrolls, rather than after the fact.

The legislation passed just weeks after the tax office confirmed it is rolling out a new digital system for accountants to speed up tax returns and provide greater visibility of when superannuation payments have not been lodged as paid to Australian taxpayers.

A survey from Xero last year revealed just how reliant on paper many companies are when processing payroll: one in three businesses it surveyed said they sent payroll advice through either fax or hard copy mail.

The tax office has since confirmed small employers, with between one to four staff, will not have to fork out big dollars for single-touch payroll systems.

“We have asked software developers to build low-cost STP solutions at or below $10 per month for micro employers – including simple payroll software, mobile phone apps and portals,” the Australian Taxation Office said in its advice to small businesses.

More than 30 accounting companies have put forward proposals to the tax office for payroll software costing less than $10 a month. This includes Xero, Reckon and MYOB.

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