The government announced on 28th December 2014 of their intention to simplify PAYG tax and superannuation reporting obligations though a new system to be known as Single Touch Payroll.
By the use of compatible software, employers or payroll system providers would process their payroll and attend to fulfilling their reporting and payment obligations with the “touch of a single button”. Any employer using software currently would be required to upgrade their program and if cloud based software is being utilised, the updates would be automatically completed by the software provider.
It is proposed that the reporting capabilities of this software will remove paper-based reporting and require employers to lodge their obligations digitally. With the introduction of this system it will require employers to report details relating to PAYG Withholding, Gross Wages and Superannuation Guarantee directly to the ATO via Standard Business Reporting contained within their payroll software, when the payroll event is completed. This will eliminate the need to report PAYG Withholding through Activity Statements and Payment Summaries.
One thing it will not address is issues faced by large PAYG Withholding and superannuation obligations, which some employers have difficulties in meeting.
What it will enable is the ATO to be notified of the superannuation contribution amounts the employer will be liable to pay to their employee’s superannuation funds. As a result the ATO shall have better visibility of these obligations actually being met.
The introduction of this system could indeed have an impact on certain businesses cash flow, with the increased frequency of payments being required on account of PAYG Withholding and Superannuation Contribution obligations.
With the use of Single Touch Payroll, new employees would have the ability to supply their details electronically through an online government portal directly to the employers’ payroll software. This would eliminate the need for the completion of Tax File Number Declarations and Super Choice forms. Or alternatively, if the employer was to enter the details directly into their payroll software they could have the ATO validate them.
Similarly, when an employees’ employment ceases the software would have the capabilities to easily notify the relevant organisations on behalf of the employer.
It is the governments’ proposal that the Single Touch Payroll system will be available from 1 July 2016, with transitional arrangements available. At the present time they have released a consultation paper available for public review and comment, below is a link to this and we encourage any employer to read over it and contact us with any comments.