Employers have not been given enough time to prepare for Single Touch Payroll, and the start dates should be pushed back at least one year, says the Tax Institute.
Single Touch Payroll is a new system for employers to report salary & wages, PAYG withholding and superannuation information. Large employers (20 or more employees) are scheduled to start using the system from 1 July 2018, and small employers (19 or fewer employees) are expected to have to start from 1 July 2019.
Expanding Single Touch Payroll to small employers was only announced in August 2017 and requires legislation be passed, on which Treasury has been consulting. The Tax Institute, in a submission on the draft legislation, says employers have not been provided with adequate time to adjust, due to the “enormity of recent superannuation reforms”.
Since the submission was made these changes have been introduced to Parliament in the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018.
The Tax Institute recommends that the dates for the rollout of Single Touch Payroll be pushed back at least one year for large employers and two years for small employers.
“We considered that many SMEs will be ill-equipped and not ready by the proposed dates since they have not been adequately informed and educated. Further, even when they are informed, SMEs are unlikely to be able to roll-out new and often expensive software systems by the proposed dates,” says the Tax Institute.
“We recommend that the ATO run a major education campaign to educate employers about the new system before it is implemented.”
The Tax Institute says the Government should also provide a tax incentive for SMEs to buy software and training. When Kelly O’Dwyer, then Minister for Small Business and Assistant Treasurer, announced Single Touch Payroll she said there would be a $100 non-refundable tax offset for Standard Business Reporting software, though this was later dropped.