By Andrew Powell >>
THE Australian Taxation Office’s (ATO) Single Touch Payroll reporting change came into effect on July 1 this year, and with it came some tumbleweeds and the chirps of crickets.
It is one of the most important changes to payroll practices in recent memory in Australia; its magnitude only matched by how underdiscussed it was.
Despite its clear importance to the operations of a business, the fact of the matter is many organisations across the country have not put the systems in place to affect the change to their reporting systems.
Whether this is because businesses are simply taking their time to get their houses in order or have no idea about the change won’t matter in the end, as there is one immutable truth they should be aware of already: the ATO never takes ignorance as an excuse.
For those unaware of the change – and there will be quite a few in that category – it requires companies with 20 or more employees to report to the ATO payments such as salaries and wages, Pay-As-You-Go (PAYG) withholding and superannuation information from their payroll solution each time employees are paid, rather than once at the end of each financial year. This will extend to businesses with fewer than 20 employees for the start of FY19.
It effectively streamlines the process of payroll reporting: once the system is in place, the ATO will have all of the information at hand for the end of the Financial Year, and one of the key benefits of the change is the reduction in reporting for both businesses and employees.
It will spell the end of payroll summaries and the stresses that come with the rush to report at the end of each year – for large enterprises and their payroll departments, it’s the loss of a high level of annual stress.
But for many enterprises those stresses are set to continue, as there’s a chance their systems aren’t set up for the change – some software suppliers may not have had their STP solutions ready for July 1, and it was therefore compulsory for them or their clients to seek a deferral from the ATO to 'be ready' for September.
It’s incumbent on businesses to immediately start discussions with their software or ERP (enterprise resource planning) providers to determine whether said provider has sought and obtained a deferral to September and determine how far away a software upgrade is – because if said provider hasn’t started the certification process by now, they likely won’t make it there by September because the process of obtaining STP certification is arduous.
It can take months, if not a full year, to obtain certification as there are myriad tests that need to take place before a go-live date. Further, there is a rigorous process that needs to be passed with regards to tax, legal and regulatory requirements.
This isn’t as easy as flicking a switch – and it’s why the lack of discussion about the change has been so alarming. Businesses need to start talking about this change.
They need to talk about how well they are equipped to process the new requirements. They need to talk to their software and ERP providers about what they’re doing to get their systems updated and ready to go, and if they aren’t, then they need to know the process that is in place to get them up to speed.
They need to speak to these providers about what is expected from them and what the benefits and, perhaps more importantly, the penalties are to non-compliance.
This new way of reporting is live, now. The ATO gave businesses enough warning about it that non-compliance at this stage is not really an option and they need to start considering how they can make the transition as soon as possible.
- Andrew Powell is the general manager Asia-Pacific for Rimini Street, a company which provides IT engineering and systems support to enable companies to extend and improve the use of their enterprise software suites and innovate into the future.