The federal government announced on Monday it has scraped together $5.8 billion in revenue to lower the budget deficit by more than was predicted in the May budget, but buried in its mid-year fiscal document are also policies that will affect how small operators do business day to day over the next two years.
The Mid-year Economic and Fiscal Outlook (MYEFO), released yesterday, revealed $2 billion in higher education cuts to help push the budget deficit to $23.6 billion, with the national accounts predicted to be back in surplus by 2020-21.
“The Government is continuing to implement its plan to boost economic growth, create jobs, support small businesses and reduce the cost of living pressures faced by Australians,” Treasurer Scott Morrison said a statement yesterday.
However, beyond the pledges to claw back the deficit and spend sensibly to create jobs, the MYEFO document reiterates future changes to the way small businesses pay their staff wages and superannuation. Here are two you need to know:
Single Touch Payroll expands to all businesses
Businesses with more than 20 employees have been preparing for single touch systems, which will become compulsory for them from July 1, 2018.
However, the government has reiterated in its mid-year budget document that companies with fewer than 20 employees also need to get set to report payroll information to the Australian Taxation Office (ATO) at the same time they process this for employees.
From July 1, 2019, all businesses, no matter how many staff they have, will be expected to use Single Touch Payroll, according to the ATO. MYEFO outlines the ATO will receive $63.9 million in funding over the forward estimates to track payroll data.
The government has also confirmed it will save $35 million over the forward estimates by cutting a non-refundable $100 tax offset for small businesses that implement standard business reporting for Single Touch Payroll. This policy change was included in the government’s budget savings omnibus bill last year.
The decision has been made because the most effective way to bring companies on board the Single Touch Payroll system is to provide “education and support services”, according to the MYEFO document.
However, principal tax consultant at Perigee Advisers, Lisa Greig, warns smaller businesses will be dragged “kicking and screaming” onto the new system.
“Very few people like change … and people are going to use consultants to set up their systems,” she tells SmartCompany.
Greig says once businesses get into the flow of single touch reporting, things will be straightforward, but at its heart this kind of system gives smaller operators less flexibility when it comes to paying their obligations.
“Small businesses are meeting their obligations, but they’re meeting them just in time,” she says.
“With Single Touch Payroll you’re bringing everything up [in terms of time] — you’ve got to submit and pay in one touch.”
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While small operators with only a handful of staff are paying their workers on time, Greig suggests some at the smaller end of the spectrum will feel stressed by the idea of Single Touch Payroll, because it gives less flexibility to change payment times when a business is closed over the December/January period, she says.
“If people also not quite as IT savvy, that’s a burden,” she says.
Superannuation in focus
Correct payment of superannuation has also been in focus this year and MYEFO places a greater scrutiny on how employees pay super in the future.
From July 1 2018, the government will close the loophole that allows an employer to reduce their superannuation guarantee contributions when the worker has salary sacrificed into super.
This means businesses will have to pay the full 9.5% superannuation amount even if their employees are voluntarily contributing a percentage of their wages into superannuation.
The budget update also reiterates the government’s commitment to ensuring employers pay the correct super amounts, with an outline of plans for tougher penalties under the “superannuation guarantee integrity” package.
“The [Tax] Commissioner will also be able to seek court-ordered penalties for employers that fail to comply with a direction or repeatedly and intentionally disregard their [super guarantee] obligations,” MYEFO states.
The ATO will also be given an extra $20.9 million over the forward estimates to identify and “take action earlier” when employers are not meeting their super obligations.