Small businesses that use Standard Business Reporting software as part of the federal government’s Single Touch Payroll (STP) Scheme will receive a tax offset worth $100 from July 2017.
Small business minister Kelly O’Dwyer announced the offset this morning, alongside an announcement that the government will conduct a pilot of the STP system in the first half of 2017, which will focus on small businesses.
Once the pilot is completed, employers with fewer than 20 employees will be required to use the STP system to report tax and superannuation to the Australian Tax Office, while larger businesses will be able to commence using the system with an option to make voluntary payments.
Employers with 20 or more employees will be required to use STP-enabled software from July 1, 2018.
O’Dwyer said in a statement this morning the tax offset is designed to help businesses make the switch.
“To assist with the transition the government will provide businesses with a turnover of less than $2 million, a $100 non-refundable tax offset for SBR enabled software,” the Minister said.
The offset will apply from July 1, 2017, to software purchases or subscriptions made in the 2017-18 financial year.
O’Dwyer said under the scheme, employers will also have the option to pay their PAYG withholding to the ATO at the same time they pay employees.
“The Turnbull government is also introducing streamlined processes for individuals commencing employment,” O’Dwyer said.
“Individuals will have the option of completing their Tax File Number (TFN) declaration and Superannuation Standard Choice forms using myGov or through their employer’s business management software.”
The STP scheme was originally slated for commencement in July 2016.
Under the scheme, electronic accounting software used by businesses would automatically report payroll information to the ATO when employees are paid, eliminating 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 original scheme had included a requirement for businesses to make mandatory real-time payments, however, former small business minister Bruce Billson said in June the government would not proceed with that aspect of the scheme and would instead consult further with industry.
The ATO confirmed in October it was pushing ahead with plans to introduce mandatory real-time payroll reporting.
Paul Drum, head of policy at CPA Australia, previously told SmartCompany including real-time reporting of PAYG withholding tax obligations by small business in the STP scheme makes sense as it will “further reduce the compliance burden currently faced by employers”.
Drum also welcomed the government’s decision not to pursue mandatory real-time payments, as this would have “created very reach cash flow problems for Australian small businesses”.
“This would have put a brake on Australian small businesses at a time when many are already struggling to make ends meet,” Drum said earlier this year.