Tax

ATO looks to bust myths on Single Touch Payroll as compulsory deadline approaches

Emma Koehn /

The Australian Taxation office has pledged to “set the record straight” over misconceptions about what employers will have to do to onboard staff once the new Single Touch Payroll system becomes compulsory, but small business groups say there are still concerns the scheme will increase their workloads.

In a statement entitled “Setting the record straight on single touch payroll”, the tax office has refuted what is says are misconceptions about what the Single Touch Payroll processes will be when a new employee joins a business.

These ‘myths’ include the idea that employees will be obligated to complete their Tax File Number declaration details and choose their super funds through the myGov portal, rather than using the standard paper forms, and that the streamlined online processes will be used by the ATO to “track” businesses and how they hire new employees, which the office says is a myth about the entire scheme.

The Single Touch Payroll system, which is currently being piloted for a small number of employers,, will become compulsory for all Australian businesses with businesses employing 20 or more staff from July 1, 2018.

From that time, all Australian businesses will be required to have a digital payroll solution that will allow reporting of all salary information, including wages, deductions and super information, to the tax office all at the same time.

The system, which was first slated to be introduced in July 2016, aims to eliminate the need for employers to report employee-related Pay-As-You-Go withholding in activity statements throughout the year or employee payment summaries at the end of the year.

The introduction of the system has been championed as a move that will cut red tape and streamline business processes, but Council of Small Business Australia chief executive Peter Strong says the tax office is “very aware” of the continued concerns that the SME community has about the rollout.

While several proposals about payroll, including proposals for mandatory real-time payments, have previously been shot down, Strong says the rollout still shows the complexity of any big systems change.

Strong believes most businesses would report having positive experiences with the ATO overall, but when changes to processes occur across industries, some may get confused and “read what they want to read”.

“In the end, [Single Touch Payroll] is a good thing, but it has to be seamless and it has to require no extra work,” Strong says.

In the back of many companies’ minds is also the sustained outages of the tax office’s online services over the past nine months, which are front of mind for businesses in certain sectors.

“What happened recently with the outages is that it has caused a big concern from those businesses that are most affected, like the accountants,” Strong says.

From the banking sector to server issues at the Australian Bureau of Statistics, Strong says all organisations are being faced with the reality that technological change is “big and expensive”.

When it comes to the idea that the Single Touch Payroll system will be used to track what businesses are doing, Strong says that myth was “sorted out very early on” in discussions about the new system.

“If it’s seen as a tracking device, it’s not going to work — and besides, the ATO already has enough capability,” he says.

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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  • MatthewAddisonICB

    A couple of corrections required to the way the above article reads
    1. Single Touch Payroll is only being applied to larger employers (Technically called “Substantial Employers”. Those with more than 19 employees.

    There has been research performed to establish a suitable pathway before STP is applied to smaller employers.

    2. Single Touch Payroll will not remove PAYG W1 or W2 from the Activity Statements. For Large employers it doesnt matter as it isnt reported or paid that way, but for others, the ATO will now prefill those fields on the BAS based on the reported payroll.

    3. At the end of year the employer will still have to perform their end of year processes and report the “Final” set of figures. This “Final” flag indicates that the payroll information is able to be used for tax returns.

    More information at http://www.icb.org.au/stp

    • James Brown

      Thanks Matthew