As Single Touch Payroll Reporting compliance dates draw nearer, BDO’s Outsourced Payroll Services Partner and National Chairman, Helen Argiris, met with three of BDO’s STPR leaders to discuss the top questions and issues from business owners preparing for the change.
“This is the biggest compliance requirement that the ATO has implemented since the introduction of GST,” says Helen.
“The April 1 deadline for employee headcount is imminent - this milestone is critical for businesses to determine whether they need to comply with STPR by 1 July 2018, or 1 July next year.
“It’s important for business owners to understand the obligations and have the appropriate systems in place to ensure their reporting meets the new ATO requirements.
“Whilst it is a compliance requirement, there is a positive side to STPR: it presents an opportunity for businesses to review and improve their payroll processes for reporting their employees’ tax and superannuation information.
“It is an opportunity to integrate their payroll and accounting systems and move to cloud-based accounting.”
Helen sat down with Kylie Patrick, Payroll Manager, BDO in Sydney; Shaye Thyer, National Cloud and Advisory Specialist, BDO in Adelaide; and Jason Daniels, Partner, BDO in Brisbane, and asked them a few questions:
The most common question I have had from clients about STPR is:
Kylie: The most common question received from our clients is “Does STPR affect me?”, followed closely by “Can you please ensure that we are compliant?”. The overarching response to both questions is a resounding “Yes”! By outsourcing your payroll to a trusted source, you are entering into a partnership where compliance is paramount and systems are in place to ensure this.
Shaye: So far, with STPR the most common question I have had from clients is: “Will my software be ready?” My response to that question is: If you’re using desktop software, the answer is most likely “no”. The nature of STPR is that it is real-time digital reporting through to the ATO via the internet. It follows then, that the system from which the data is coming from should be internet-enabled – meaning cloud-based. Those software providers at the front of the market (currently KeyPay, Xero, QBO, MYOB Essentials and MYOB AccountRight) have all committed their readiness. The ATO have a list of providers here.
Jason: The most common question we get from our clients is “what do we need to do next?” We have recommended to all of our clients who will need to be ready for STPR from 1 July 2018, that they contact their payroll software vendor and make sure they are going to be ready for STPR. If they are going to be ready, confirm the timing of the release so that if you have to do any work at your end to upgrade the software, you have the resources ready and available. If they aren’t going to be ready, you’ll need to find out what exemptions they have applied for (and been granted from the ATO) and when they will be ready to go. We are seeing some instances where the payroll software provider is not upgrading their system to be STPR compliant and the business only has a short period of time to implement new systems.
The most common issue I have observed for businesses aiming for STPR compliance is:
Kylie: The most common issue around STPR was the surety for businesses around the ATO’s release dates and development requirements. The ATO have now introduced feedback and discussion panels, and regular releases of the development requirements for STPR are more readily available.
Shaye: With STPR the most common issue I have observed for businesses is unintentional compliance risk. Where we use software that involves much manual human data entry, we have significant risk of error – even with the most experienced of operators. Software has evolved to automate so many processes within the payroll function and can significantly reduce compliance breaches through human error. Timesheets don’t need to be rekeyed any more – they don’t even need entering in some cases. Leave can be managed by the employee using their mobile phone – integrated with the payroll system. Systems are integrated with changes to Awards and other industrial relations guides, to sound alarms when payments are made and conditions are endured outside of these boundaries. It doesn’t replace an experienced operator, but it does significantly reduce the compliance risk associated with unintentional human error in the payroll process.
Jason: The most common issue I have observed relates to the payments of allowances – especially motor vehicle allowances. In many cases, these allowances are not reimbursements according to the definition provided by the ATO. These are being paid without any PAYGW being deducted and no withholding variation being approved by the ATO, and often no consideration has been given as to whether this allowance should be subject to superannuation. Under STPR, the ATO will be able to check whether PAYGW and superannuation appears reasonable against the payments being made to staff.
The biggest benefit of STPR for businesses is:
Kylie: Without a doubt streamlined reporting and payment requirements are the biggest benefit of STPR. Although this is not compulsory in the initial release of STPR, we will have the capacity to report and pay employees, superannuation and PAYGW all in one go - with a click of a button.
Shaye: I think the biggest benefit of STPR is a greater incentive for business to consider and adopt best-of-breed, future-fit software NOW. For many businesses, payroll is a tricky area that takes special expertise to ensure it’s 100% compliant, and so making changes in this area can often get moved to the ‘too hard basket’. STPR compliance and possible associated ATO penalties give businesses that little nudge they may need to save them from potentially business-critical risk and allow them to enjoy the peace-of-mind of best-practice operating environments, sooner. Selecting a cloud-based platform for payroll and accounting ensures that businesses are future-fit – that they’re not weighed down by unnecessary overheads driven by old systems and processes, that they can scale up economically as their needs grow – so that, ultimately, they can remain competitive as well as compliant in their chosen industry.
Jason: The biggest benefits of STPR to business will be: the ability to streamline the on-boarding of staff who have setup their choice of superfund through MyGov; online TFN declarations for staff; and relief from providing year-end and part-year payment summaries to staff. This may not sound like a lot, but for many businesses, this will add up to be a significant saving in time and effort over the course of a year.