7. Single Touch Payroll
The Minister for Small Business and Assistant Treasurer, the Hon Kelly O’Dwyer MP, announced on 21 December 2015 that business reporting of tax and superannuation will be simplified with the implementation of Single Touch Payroll.
It has been mandated that Single Touch Payroll for businesses with 20 or more employees (large business) will start from 1 July 2018 with an option to opt in from 1 July 2017 for those ready to use Single Touch Payroll.
Single Touch Payroll aims to streamline employer reporting obligations to the ATO. Under the initiative:
- A new streamlined process for the commencement of new employees will be introduced to simplify the process for employers and individuals
- Employers will report Pay As You Go (PAYG) withholding as a part of their natural payroll cycles using Standard Business Reporting software
- Details of superannuation contributions will be sent to the ATO when payments are made to superannuation funds, leveraging the Superstream message
- Employers will have the option to voluntarily pay their PAYG withholding at the same time they pay their staff.
The ATO is consulting with software developers, superannuation industry, clearing houses, superannuation stream stakeholders etc. for further feedback. Shortly consultation will commence with other stakeholders to identify challenges and issues around Single Touch Payroll.
The new law that sets the framework to support Single Touch Payroll has not yet been drafted. The design around the administration of Single Touch Payroll will be led by the ATO and will be run in parallel with the drafting of the law.
Single Touch Payroll is one of the first programs where the Government will leverage natural business processes to enable people to meet their tax and super reporting obligations in the most efficient way. Recent stakeholder consultation workshops with Treasury provided the opportunity to review and refine the mapping of business processes which may be impacted by the implementation of Single Tax Payroll. The concepts were also tested to ascertain the impact on employees if implemented. Learnings will be considered in the law design.
A Small Business Pilot is being run for businesses with 19 or less employees to identify and verify the benefits of Single Touch Payroll for these businesses. The ATO is aware there are many businesses that do not have payroll software, particularly those with 5 or less employees. For small business (<20 employees) it is optional until it is determined if this is a benefit for small business.
Tax and BAS agents play a key role in assisting people with this and the ATO will continue to consult with intermediaries and others to find appropriate solutions. More details will be released in next couple of weeks around consultation workshops particularly around the detailed administrative design.
Director Penalty Regime and Activity Statement Financial processing
The Single Touch Payroll program includes two pieces of work that will see changes made to ATO systems to deliver operational efficiencies and an improved client experience:
- Director Penalty Regime will provide the platform for automated management of the Director Penalty Regime for PAYG withholding and Superannuation Guarantee Charge
- Activity Statement s and Franking Deficit Tax financial processing into the ATO Enterprise system.
Every account created for Activity Statements since 2000 will be moved into the ATO’s new accounting system. The accounting system views will be similar to current the current format however changes will be made where accounting descriptions are causing confusion to the user. Suggestions from consultation processes will also be incorporated into the design. Testing and consultation will be ongoing and BAS Agent Association Group members are urged to put forward their ideas. Members interested in future consultations can send their details. There is a substantial amount of testing and consultation happening around the accounts screens.
The expectations are that the ATO will do what is can to improve it up to January 2017, that it will be a foundation piece and ideas will be collected but the design should not be locked in too soon.
Members can put forward their ideas and expressions of interest for inclusion in future consultations to BASAAG@ato.gov.au.