The Government has just re-launched changes to tax and superannuation reporting obligations that will be delivered by Single Touch Payroll. This program is part of the Government agenda moving Australian business to digital record keeping, reporting and payment systems, and follows on from the widespread implementation of SuperStream for processing employer superannuation contributions.
Single Touch Payroll will involve both the real-time reporting of tax and super information to the ATO when employees are paid, and online services for the registration of new employees.
The critical question for super funds and administrators is ‘will the requirements be kept simple?’ The previous version was more complex, and I hope this version will reflect the need for much more simple requirements this time around.
The Government previously launched Single Touch Payroll just after Christmas 2014, foreshadowing a mandatory service from July 2016. Following a backlash from businesses concerned about managing cash flows under the Single Touch Payroll regime, and concerns about the costs and difficulties in upgrading payroll and accounting software, the Government announced that it would review the program, and put a temporary stop on its deployment.
The Government is committed to the re-launch having allocated $297 million to the Single Touch Payroll program in the 2016 half-yearly budget in December. They are however taking a slower and more staged approach to Single Touch Payroll deployment this time around. They propose voluntary transition to Single Touch Payroll reporting for employers with more than 20 employees commencing in July 2017, with it being mandated for these employers from July 2018.
There should be a controlled and orderly approach to implementation, based on the extended SuperStream timetable. In SuperStream, rollover implementation preceded contributions implementation, where medium and large employers were on-boarded before small employers and SMSFs. This ramping-up and use of pilot programs meant that early lessons were continuously applied during implementation.
A pilot has however been announced by the Government for small businesses (less than 20 employees) to see if Single Touch Payroll can demonstrate benefits for them. The pilot will take place in early 2017 with a report due by end 2017. The Government has not said that Single Touch Payroll will be mandatory for small businesses, but may review this after the pilot.
This part of Single Touch Payroll will impact on super funds and their administrators as many employers are likely to move to harmonising contribution cycles with reporting, tax and income payment cycles.
New employee onboarding initiatives, including the integration of TFNs, choice of fund and possibly account consolidation will also have administrative and strategic impacts on super funds. What’s more, the structure, content and configuration of this will have an impact on the decision that members make. A design workshop with all stakeholders, including the super industry, and consumer testing is critical to the success of the next step.
The ATO will have support services (eg, online forms) in place by July 2016. These may be used on a voluntary basis by an employee or employer, and will supplement (not replace) paper forms. There is no plan to make use of online forms mandatory but it is almost inevitable they will become widespread.
Under the new Single Touch Payroll information will be automatically reported to the ATO through its Standard Business Reporting (SBR) software. This is an extension of the whole of government SBR focus and in our past experience with SBR we believe that this is a welcome addition to the digital economy. Feel free to touch base if you have any questions.
Executive Superannuation Policy Advisor, VIC