Institute of Certified Bookkeepers

September 29, 2017

Matthew Addison participated in the ATO STP Small Business Pilot Working Group on behalf of ICB and the bookkeeping community. ICB's input has hopefully influenced the report to the Minister.

However, please note the following comments in relation to the report:

1.2 Key Findings

“Most small businesses will find they can implement Single Touch Payroll with a relatively modest amount of effort and cost”

ICB Response: This will only be the case if software companies deliver an effective and efficient business process.

“…the change will bring major improvements to system integrity and transparency”

ICB Response: We agree. STP will/should result in the ATO having information to ‘catch the crooks’. Legitimate compliant small businesses want the guy down the road who doesn’t pay super and the PAYGW to be caught, and caught early.

“Employee will gain new transparency over their… PAYG withholding position and super contributions as reported by employers each payday”

ICB Response: This is not technically correct as “Super Contributions” will not be reported each payday, the amount of super calculated and accrued will be. It also doesn’t acknowledge that employers by law, must supply employees with payslips each and every payday, and much of the STP information is visible to the employee on their payslip.

“The pilot identified a series of potential barriers to implementation… in the current ‘no software’ group.”

ICB Response: We have presented to the ATO that the disconnected employer already has to prepare a BAS or at least an IAS each quarter. We see a very viable model of STP being that the disconnected employer will continue to utilise the services of agents to lodge their BAS once per quarter and that the agent would be able to lodge an STP report, once per quarter. The STP design allows for this concession.

“There are a range of strategies and tools which the ATO can use, in concert with stakeholders, to bridge the capability and confidence gap these employers face. Intermediaries, such as bookkeepers for example, will play a very important role in advising employers in this segment and assisting with the introduction of Single Touch Payroll solutions.”

“it is reasonable to expect that not all small business will be able to make the transition to Single Touch Payroll by mid 2020”

ICB Response: We agree

“The ATO will encourage small step change even where micro businesses (less than 5 employees) face significant hurdles and try to create avenues for this to be a prelude to a more fulsome move toward digital, payday reporting. Where needed, limited relief in the form of temporary extensions”

ICB Response: This is appropriate and we are in the design discussions

“A final group of employers pose a different challenge. They are small businesses with consistently poor compliance history, continuing bad debt performance or fraudulent claims. With the introduction of a small business mandate for Single Touch Payroll, they would come under changed arrangements and should be required to conform at the earliest possible date with regular, pay-day based reporting in the approved digital channel. More regular payment terms could also be considered. This will help address the ‘level playing field’ issue up front, rather than allowing it to undermine confidence in the rationale for improved transparency and timeliness of reporting.”

ICB Response: Acknowledged and we look to support this concept

“A well-staged, properly supported implementation, with the close collaboration of solution providers and intermediaries, is achievable but only with clear deadlines, transition plans and ultimately, clarity on sanctions for non-compliance.”

ICB Response: Acknowledged and we look to support this concept

1.3 Recommendations

  1. Legislative  mandate... Small employees by 1 July, 2019... transition period for 12-months and non-flexible start date of 1 July, 2019... (if) repeated history of poor compliance
  2. ATO deliver proactive, well targeted communications, help and support
  3. Ensure a range of low-cost/no-cost solutions
  4. 1 July, 2020 assess and report on strategies for any small business not yet engaged
  5. ATO assuring a positive client experience if they do the right thing
  6. To partially offset costs of implementation... a targeted incentive for less than 5 employees
  7. All STP solutions should be certified for compliance

ICB Response: We agree!

References

  • 2nd October, 2017
loading