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  • Small Business Stewardship Group minutes 26 October 2017

    Meeting details

    Venue: ATO Offices, Canberra

    Date: 26 October 2017

    Chair: Deborah Jenkins

    Contact: email Small Business Stewardship Group secretariat or phone 02 93745658

    Attendees

    Deborah Jenkins, Deputy Commissioner, Small Business, ATO

    James O'Halloran, Deputy Commissioner Super, ATO

    Robert Ravanello, Deputy Commissioner Debt, ATO

    Mathew Umina, Assistant Commissioner, ATO

    Christina Byrnes, Director ATO

    Graham Baxter, Business Enterprise Centres Australia

    Deb Cook, small business owner

    James Coward, Restaurant & Catering Australia

    Susan Franks, Chartered Accountants Australia & New Zealand

    Bede Fraser, Treasury

    John Hart, Restaurant & Catering Australia

    Ben Kearney, Australian Lottery and Newsagents' Association

    Scott Kompo-Harms, National Farmers' Federation

    Paul Mather, Employer Obligations Australia

    Heath Michael, Australian Retailers Association

    Maree Petersen, small business owner

    Michael Smith, Australian Chamber of Commerce and Industry

    Gillian Stapleton, Direct Selling Australia

    Guests

    Patrick Boneham, Treasury

    Anne Vandenhurk, Treasury

    Apologies

    Tim Dyce, Deputy Commissioner Indirect Tax, ATO

    Kate Carnell, Small Business and Family Enterprise Ombudsman

    Michael Croker, Chartered Accountants Australia & New Zealand

    Richard Dudley, Motor Traders Association of Australia

    Matthew Elliston, small business owner

    Jock Kreitals, Real Estate Institute of Australia

    Debbie Neutze, Australian Veterinary Association

    James Pearson, Australian Chamber of Commerce and Industry

    Michael Renshaw, Australian Lottery and Newsagents' Association

    Peter Strong, Council of Small Business Australia

    Wally Tallis, Indigenous Business Australia

    Agenda items

    1. Welcome and introductions

    The Chair, Deborah Jenkins opened the meeting, welcoming members and noting apologies.

    2. ATO update since last meeting

    The Chair addressed the following topics:

    • Communications from the ATO since the last meeting. Members were invited to comment on the frequency, content and format of these and to inform the secretariat of their preferences.
    • Action items from the previous meeting.
    • Key points from the Commissioner’s speech to the COSBOA small business summit on 24 August 2017 that can be accessed here.

    3. Single Touch Payroll

    Anne Vandenhurk from Treasury joined the meeting to provide an update on Single Touch Payroll (STP).

    Single Touch Payroll is a reporting change for employers with 20 or more employees, which will be compulsory from 1 July 2018.

    Employers will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from their payroll solution at the same time they pay their employees.

    The Single Touch Payroll Small Business Pilot Final Report, delivered to the Minister for Revenue and Financial Services in June 2017, has been published.

    Key recommendations of the report include:

    1. A legislative mandate requiring implementation of Single Touch Payroll should be introduced for small employers (with 19 or less employees) with:
      • an operative date of 1 July 2019 from which small employers must comply
      • a transition-in period of two years including a voluntary take-up period of 12 months leading up to 1 July 2019, followed by grace period for the next 12 months
      • a non-flexible start date of 1 July 2019 for small employers with a substantial and repeated history of poor compliance with super guarantee or PAYG withholding (i.e. no grace period applies).
       
    2. The ATO, in collaboration with industry and community stakeholders, develop and deliver a pro-active, well targeted communications, help and support campaign with particular focus on small employers with:
      • less than 5 employees and not already working with payroll or reporting software
      • little or no digital capability
      • in rural/remote areas where digital connectivity may be a constraint
      • infrequent or irregular employment arrangements
       
    3. The ATO continue its work with digital service providers, innovative solution providers and intermediaries to ensure that a range of low cost/no cost solutions for reporting under Single Touch Payroll are available in the market for micro businesses.
    4. At the end of the transition-in period the ATO, with input from the Australian Small Business and Family Enterprise Ombudsman, assess those still not compliant with Single Touch Payroll and report to government on strategies for dealing with those remaining businesses.
    5. In order to build confidence in the implementation and encourage early take-up, the Commissioner of Taxation should set out a clear undertaking to small employers, assuring them of a positive client experience if they do the right thing under the new reporting regime.
    6. As a partial offset for the costs of implementation and encouragement for early take-up, a targeted incentive should be considered for micro businesses with less than 5 employees that implement Single Touch Payroll before 1 July 2019. The nature and form of this incentive should be explored further with a view to replacing the previously announced $100 Tax Offset, noting:
      • the incentive should be available with little or no additional administrative effort by small business employers
      • the scheme should apply appropriate anti-fraud controls as a means of preventing illegitimate claims
       
    7. All Single Touch Payroll solutions should be certified for compliance with Single Touch Payroll, building on the process already being developed for the substantial employer roll-out, and ensuring therefore that small business employers can access a simple, easy to search online directory of certified solutions.

    Key points from the meeting discussion included:

    • The Government’s announcement on 29 August 2017 that Single Touch Payroll would be extended to small employers from 1 July 2019 (refer recommendation 1).
    • Employers will not need to register for STP.
    • Employers have the option to pay their PAYG withholding at the same time as they pay their employees but this is not mandatory.
    • How to count employees? To determine the number of employees, a count needs to be done on 1 April 2018. This is a headcount, not a count of full time equivalent (FTE). Specifically:
      • If an employer has 20 or more employees on 1 April 2018, they are considered to be a 'substantial employer' and will need to report their PAYG withholding and superannuation contribution information to the ATO through Single Touch Payroll from 1 July 2018.
      • If an employer has 19 or less employees on 1 April 2018, they are considered a small employer and Single Touch Payroll reporting will be optional until 1 July 2019. It will then be mandatory from that date, subject to legislation being passed in Parliament. (refer recommendation 1).
       
    • Reporting for a significant number of restaurants and cafes will commence on 1 July 2018 due to the large number of casual employees these businesses usually employ.
    • Acknowledgement that it may be necessary to provide additional support to employers that could have difficulties implementing Single Touch Payroll, for example employers in regional areas or those with little or no digital capability (refer recommendation 2).
    • The ATO needs to continue to provide relevant communications about Single Touch Payroll.
    • Members provided feedback about potential incentives for small employers to early adopt Single Touch Payroll, including those with less than 5 employees (refer recommendation 6).
    • Members also made suggestions about possible education approaches to support small employer's transition to Single Touch Payroll.

    4. Strategic discussion of business

    Topics discussed included:

    • A member commented that her experience with lodging her activity statement using Simpler BAS was 'so easy'.
    • The complexity of employee vs contractor status and the impact of definitions on certain industries.
    • Providing communication pieces for inclusion in member's newsletters and to post on social media, particularly in formats that can easily be re-posted.
    • Comments about interactions with and communications from the ATO are positive.
    • The cost of energy is a hot topic for small business. There is anecdotal evidence that businesses are not expanding due to high costs.
    • ATO posts on social media are helping convey the 'human face' of the ATO and will improve trust with the community.
    • Satisfaction with the content of ATO small business education workshops.

    5. A small business perspective

    Small business operator, Deborah Cook shared the following complexities of running a small business:

    • The impacts of cash flow on meeting obligations.
    • A lot of time in the management of the business was spent following up outstanding payments from debtors.
    • Trying to remain competitive and being undercut by other businesses
    • Cuts to public service employment in the ACT have had an impact on the work generated for the business in recent years.
    • Complying with the ATO definition of employee vs contractor has had an impact on their business model.

    Deborah commented that SuperStream was easy to use.

    6. Small business superannuation clearing house (SBSCH)

    The ATO is moving the current SBSCH system into the ATO online environment in early 2018.

    The move provides an opportunity to improve the service and integrate with current ATO systems, leveraging off existing functionality.

    We will communicate with users of the system and key stakeholders in the lead up to the transition to advise them of key dates, times and accessibility issues.

    Following the move users will have the ability to log into the SBSCH via:

    • ATO Online
    • Business Portal
    • Tax Agent Portal
    • BAS Agent Portal

    There were:

    • around 303,000 registered as at the end of September 2017
    • 275,817 active users in 2016/17
    • 204,261 employers who made a successful payment in 2016/17

    7. Other business

    • There was further discussion from the previous meeting about Fringe Benefits Tax (FBT) concessions for small businesses. In particular, minor private use of exempt vehicles such as dual cabs, utilities and vans and safe harbour options in relation to minor entertainment benefits.
    • Members were reminded that we will be undertaking the biennial expression of interest process to refresh the membership of the Small Business Stewardship Group. Incumbent members will receive an email invitation to reapply presently. The closing date for expressions of interest is 30 November 2017.
    • Chair Deborah Jenkins thanked members for their contributions to meetings throughout the year.
    • The dates for meetings of the Small Business Stewardship Group in 2018 are currently under consideration and will be advised as soon as confirmed.
      Last modified: 20 Dec 2017QC 54125