ICB will take a leading role into the ATO consultations on how Single Touch Payroll (STP) will be implemented for the Micro Employers (1 to 4 employees).
STP is here now!
Substantial Employers (20 or more employees) must know what their transition plan into STP is on or before 1 July 2018. This may include being fully implemented and having commenced reporting before the end of this financial year.
All employers are expected (subject to the legislation which is before parliament) to be reporting their payroll according to STP requirements on or before 1 July 2019.
The ATO have listened to voices stating that the Micro end will need further consideration.
- What about closely held entities (only family members employed)?
- What about companies that only employ the directors/owners where the wages are worked out at the end of the year?
- What about the employer that isn't connected to the internet?
- What about the employer that isn't computerised and the bookkeeper records all the wages once per quarter?
- What about the empoyer that does everything only on paper?
These and other scenarios will be discussed with professionals, small business and the ATO commencing this week.
The ATO advise as follows...
Legislation has been recently tabled in Parliament aiming to give effect to the government’s decision to extend Single Touch Payroll (STP) reporting to small business with a proposed start date of 1 July 2019.
As the STP Small Business Pilot – Final Report identified (ATO, June 2017), many small businesses are expected to make the transition to STP fairly readily. However a significant cohort of mainly micro businesses (1-4 employees) are likely to struggle with barriers that range from cost, time and capability to trust. Around 390,000 of these businesses appear not to be currently users of payroll software and around 100,000 of these have little or no experience in the digital world. The report endorsed the ATO continuing to work with solution providers in finding low cost and innovative solutions which would better fit the needs of this market segment.
The ATO is undertaking a series of design workshops with tax practitioners, accountants/bookkeepers and small business owners to better describe this segment’s needs and develop a set of requirements which would best facilitate more tailored solutions for these businesses. Workshop participants will interact with a range of solution providers who have been informally working to develop reporting or other solutions for this market. The ATO will call for industry nominations and small business representation for the workshops during April 2018.
By mid-year, the ATO intends to publish a set of requirements and potentially an Expression of Interest to the solutions market to determine what formal interest there is from potential developers. The ATO will offer to collaborate with registered developers over the following six months to December 2018 by way of in-kind help and support (sharing data insights, answering questions, establishing key contacts, tracking progress, etc).
This work is designed to be targeted at those businesses with relatively simple affairs, low digital capability and Australian domiciled employees. It also will look at how STP and SuperStream obligations could be better integrated in new solutions. It is not intended to displace solutions in micro businesses which already have viable payroll software or whose business model necessitates a more sophisticated solution.
The ATO expects there will be a range of potential solutions which will emerge from this process and be made available by their suppliers to the market. Intermediaries, such as bookkeepers and tax practitioners, are also likely to play an important role in how these solutions are delivered especially in the initial take-up and set-up phase. The ATO has previously stated that it does not intend to develop its own STP solution and instead will do all that it reasonably can to stimulate market based solutions.
This stream of work will be run by the Single Touch Program in the ATO through its design team and will utilise the agreed consultation framework for STP.