The number of small businesses signed up for Single Touch Payroll (STP) reporting almost doubled in the weeks leading up to the legislative soft deadline yesterday, tax office figures reveal. But there’s still a way to go yet.
By new financial year eve last Sunday, a total 107,000 small employers were reporting under the new payroll regime, about 14% of the approximately 730,000 businesses the ATO estimated it would need to onboard last October.
About 48,000 firms made the switch during the June end-of-financial-year (EOFY) rush, amid a belated but nationwide marketing push from the ATO.
However, while the effort almost doubled the number of firms signed up compared to the beginning of the month, the figures reveal onboarding has yet to even approach the halfway mark. And, with many early adopters already locked in, the tax office has its work cut out to get the message out to more difficult cases.
Crucially, the 107,000 figure includes about 45,000 businesses that have been reporting payroll in real time since at least October last year, meaning recent efforts have managed to convince just 62,000 to make the switch.
Described as the biggest tax compliance undertaking since the GST, employers with 19 workers or less are, technically, required to start reporting under STP from the start of this week.
Larger firms, which have been reporting under STP for longer, could soon start receiving fines for persistent non-compliance, after their own grace period expired.
To ease the burden on SMEs, and to learn the ropes of the new system itself, the tax office has pledged a light-touch enforcement approach over the next 12 months, and won’t start asking questions before September 30.
By then, non-exempt employers will need to be signed up for STP reporting. Or, if they’re a micro business with on to four employees, have applied for quarterly reporting.
“We will grant deferrals to any small employer who requests additional time to start STP reporting,” an ATO spokesperson said on Monday.
MYOB’s head of product Dale Dixon says there was a “huge uptick” in the number of businesses using MYOB’s digital payroll switching over in the past week, as firms prioritised EOFY compliance.
But, employers already using digital accounting software are the least of the ATO’s concerns. In February, representatives estimated there are about 300,000 micro employers without digital payroll who would need to be signed up.
The ATO has not revealed how many businesses have applied for deferrals or quarterly reporting so far, which makes it difficult to determine the number of micro employers yet to take any steps to signup.
However, multiple third-party surveys in recent months have consistently found large numbers of small employers aren’t on the same page as the tax office.
A MYOB survey of 520 small business owners released last week found only 41% of micro employers had heard of the scheme.
Tony Greco, general manager of technical policy for the Institute of Public Accountants, says more employers are expected to sign up progressively over the next year, with the ATO signalling its desire to take a longer-term approach to the rollout.
“[Employers] will progressively come on board during the course of the year,” Greco says.
“As STP reporting is based on providing YTD figures, missing a few months pay runs will not cause too much trouble.”