How Single Touch Payroll will effect you and your business?
Single Touch Payroll will effect a lot of Australian Businesses in some way of the other. Are you updated?
In Australia, wider Asia, and around the world, we’re experiencing a financial renaissance.
In just a few years we’ve seen our financial habits change dramatically, as smartphone banking apps, ‘tap and go’ accessories, and even cryptocurrency has entered our daily life as a means of paying for goods and services.
These changes have all big in personal spending, but what about in business?
While the Australian Taxation Office (ATO) may not become famous anytime soon for a sleek and sexy marketing campaign, a quiet revolution has also taken place in-house delivering many new offerings.
Nowhere is this more apparent that in the space of Single Touch Payrolls (STPs).
This new innovation promises to be a landmark reform to the way in which payroll and superannuation is processed.
Brief Recap of Single Touch Payroll (STP)
For those yet to be familiar with it, a brief recap of Single Touch Payroll is useful.
The new process will deliver a change to the way in which employers report payments to the ATO. Via use of Single Touch Payroll, employers shall have the opportunity to report payments like pay as you go (PAYG), salaries and wages, and super information directly to the ATO simultaneously as payment is made.
This process guarantees to provide a more efficient and streamlined service for business, employers, and government accountants.
The automation of many payments that previously required manual fulfilment promises to save time not only day by day, but at the end of the financial year (EOFY).
Accordingly, by introducing a more instantaneous and agile reporting system, the ATO seeks to create a more business-friendly environment for business in the era of disruption.
STPs Effects on Small Businesses
These changes are especially welcome to Australian business as it seeks to compete in an era of disruption and greater globalisation.
While both these trends offer considerable economic opportunity in tandem to their challenges, it’s a reality that many businesses now require a more forward-facing, public operation.
Accordingly, more time is now required for ongoing maintenance of online websites, social media platforms, and other areas of engagement like customer support, than generations prior.
This can be especially challenging for small business.
In a day and era where record levels of mergers and acquisitions (M&As) are being seen overseas, and Australia’s economy considered a prime candidate for similar events locally, small business can feel increasingly time-poor and embattled to compete with the more substantial resources of their more sizeable competitors.
By its nature, the wheels of government and the tax system shall always turn slowly.
This is be expected and need be anticipated by Australian businesses as they plan for the future.
Undoubtedly though, when a change is made and proves effective, it can have a positive and long-lasting impact on small business. Both the individual operations and the Australian commercial community as a whole.
It’s here that the introduction of the Single Touch Payroll particularly serves as a very welcome development, enabling small business to free up time previously spent on administration and payroll.
It also serves as a beacon of potential future changes to come in the field, as the Australian government seeks to create an economy that is truly agile and responsive to market demand.
Not only is progress in this area vital to further grow Australian business, but also to ensure it maintains its competitiveness in a fast-evolving global economy.
Expansion of the Payroll Tax
Alongside Single Touch Payroll, a number of future reforms remain on the cards for the Australian taxation system.
The potential for an expansion of the payroll tax is particularly prominent.
While this initially may make small business shudder, the working compromise envisioned would see payroll tax now come to cover all wages, while simultaneously seeing a reduction in the rate across the board.
In turn, reform of income tax that would see the presently high tax rates reduced is also on the cards.
Calls to adopt a similar flat tax system as seen across the Tasman in New Zealand – where once anyone earns above $70,000 the maximum rate they shall pay is 33% – has found strong support among numerous small businesses aspiring to see a more stable and straightforward system in place for their employees.
The introduction of Single Touch Payroll is sure to impact Australian business in a variety of ways.
From calculations among Canberra’s accountants to small businesses operating around Australia.
The impact on daily operations owing to STP’s emergence shall vary from business to business.
Yet, a common feature for all shall be the need to ensure existing payroll software is capable of handling Single Touch Payroll reports.
If not, an upgrade or new purchase will be required to ensure the correct reporting and compliance occurs. A good way to establish what software solution may best suit you is to get in touch with the Australian Business Software Industry Association (ABSIA), who have a range of recommended apps.
Consulting with colleagues in your industry is also a great way to seek out the right program for your business.
Becoming familiar with Single Touch Payroll and the process today is sure to benefit Australian business now and into the future.
This especially because the years ahead shall see the system shift from optional compulsory for many Australian businesses.
At time of writing, mandatory STP is set to commence on July 1st 2018 for businesses with 20 or more employers.
While no penalties will apply in this initial transition year, it is anticipated many businesses will need to update their payroll solution to fully utilise Single Touch Reporting.
In turn, it is expected businesses with 19 or less employers shall have to make use of the STP system from July 1 2019.
Though at present these changes have been announced by the government but are still being made into new legislation, so some possible changes remain possible in this category.
With Single Touch Payroll set to become compulsory in the next financial year, getting ahead of the curve now and familiarising your business with the process shall always be preferable over getting caught out next year, and struggling to learn the process while also attending to regular business day by day.