The roll out of single touch payroll treats businesses with contempt
Tuesday, July 21, 2015/
Joe Hockey calls it the ‘sniff test’ other politicians call it the ‘pub test’, either way there are plenty of examples where politicians in this country are treating the rest of us with contempt.
There is one area however, where you would think this should not be the case: the collection of tax revenue.
Look at this: On Sunday 28 December (which is a bizarre date to release a new government policy unless you don’t want people to talk about it), the Minister for Small Business, Bruce Billson and the Assistant Treasurer Josh Frydenberg announced “the Government will cut red tape for employers by simplifying tax and superannuation reporting obligations through Single Touch Payroll”.
Now I am a fan of the Single Touch Payroll system, but I find the government’s selling of this initiative to be an example of how out of touch they are with ordinary people and how they are more worried about what interest groups will say about them in the media.
In basic terms, Single Touch Payroll will be an electronic system that at the time a business’ payroll is run, will send funds in three directions: one, to the employee’s bank account – wages; two, to the employee’s superannuation fund; and three, the tax withheld to the Government. That seems pretty straight forward doesn’t it?
This should be the easiest policy ever to sell to the electorate. The employee (ie the voter) will get their superannuation paid into their super fund at the time they receive their wages. Even the Labor Party and the ACTU would support this.
At the same time the Government will receive its money instead of having to wait until businesses lodge and pay the tax withheld from employees’ wages. So, the Government gets its money sooner which helps its cashflow – and may be less likely to increase taxes.
I don’t know about you, but I think this would pass any sniff or pub test anywhere.
So why is the government trying to sell this as a win for business when in fact it’s not a win for business at all. It’s a win for employees and the federal government. The reason is that the Government like the majority of politicians in this country are scared of what people will say about them.
In this case the government is worried that the business lobby will say this initiative will have a significant impact on business’ cashflow. Whereas businesses at present can y sit or invest your super, the government’s PAYAG and the BAS they owe (until it is due), Single touch Payroll will mean businesses will have to transfer funds at the same time employees are paid.
For some small businesses this may be a good thing. Instead of buying a new Ute because they treat the money in the bank as theirs, they will be need to meet their tax and employee obligations. In reality, it will make them compliant. This still passes the ‘sniff and pub’ tests.
But for most businesses, the implementation of ‘Single Touch Payroll’ will have a negative impact on their cash flow. More money will go out sooner than before, while they are still waiting to get paid by their customers. In many cases these terms are more than 30 days, so they are in limbo waiting to get paid while seeing their money disappear to the government long before they are paid.
To sell this initiative to the business lobby the Government is using one of their best performers, Small Business Minster Bruce Billson. . So not only is the government treating the ordinary person like a dummy, they are also doing the same to business. That’s two strikes.
Don’t worry, like Tim Shaw there’s more. Not only has the Government botched the selling of this initiative they have also royally stuffed up the implementation. To use electronic payments such as ‘Single Touch Payroll’ every business will need access to the internet and will more than likely require accounting or payroll software that links to their bank accounts to make ‘real time’ payments.
Some small businesses are pretty much ready for a system such as ‘Single Touch Payroll’ to be rolled out, as they have moved to ‘cloud’ accounting software. However, many have not moved to these ‘cloud’ systems and many will not at the moment as their internet access is so slow. Enter the Communications Minister Malcom Turnbull.
The Communications Minister would have us believe that the rollout of the NBN is going swimmingly and that in this country we have no issues with getting internet access at reasonable speeds. Now, this doesn’t even pass the bulldust test as people try and use the internet for their business daily and many know that it’s not up to scratch.
Recently the general public got a taste of what Tax Professionals have to deal with on a daily basis when they couldn’t lodge their personal Income Tax online because the ATO systems were down. To put it bluntly the ATO, is so starved of resources and the ability to build proper systems it’s a bit like having a sword fight with some rolled up newspaper.
Maybe the government could cut business red tape by having tax systems that work – but that would smell too good for Hockey!
So while ‘Single Touch Payroll’ should be easy to sell, the government has been consulting with business to head off rumblings about the measure. On 10 June Billson announced that ‘the Government will undertake further consultation with the business community as it looks to cut red tape for employers’ and as such “acknowledges that a start date of July 2016 will not be achievable for many businesses”.
Seriously, do they think the business community, tax professionals and ordinary people are that stupid?
‘Single Touch Payroll’ will not be implemented because they ATO can’t handle it, the internet for small businesses is not up to it and business groups will publicly criticise the government for driving them to the wall by cutting their cash flow.
While I do not think the Labor or the Greens treat ordinary people with any more respect, I think that politicians should stop playing to the media and start thinking how their decisions will enhance the lives of those with a nose walking down the street to the pub.
Stuart Norman is the chief executive of the Association of Accounting Technicians Australia