Relief for SMEs as government rules out mandatory real-time payments under Single Touch Payroll scheme

The decision by the federal government to not proceed with requiring mandatory real-time payments under its Single Touch Payroll scheme will provide welcomed relief for small business across the country, according to CPA Australia.

Small Business Minister Bruce Billson said in a statement on Wednesday the government has asked the Department of Treasury and the Australian Tax Office to consult further with the business community and software industry on the both the scope and timing of the planned changes, with a view to undertaking targeted pilots of the scheme from July next year.

Under the Single Touch Payroll scheme, which was due to commence in July 2016, accounting software used by businesses will automatically report payroll information to the ATO when employees are paid.

Employers would therefore not be required to report employee-related Pay-As-You-Go Withholding in activity statements throughout the year or employee payment summaries at the end of the year.

The Single Touch Payroll system will also streamline how employers declare Tax File Numbers and employee superannuation choices, with the aim of simplifying the process of employing new workers.

But Minister Billson said on Wednesday the government has listened to feedback and now acknowledges the July 2016 start time “will not be achievable for many businesses”.

He also said the government will not proceed with requiring businesses to make mandatory real-time payments under the scheme, instead consulting on real-time reporting and the option of voluntary real-time payments, as it recognises “the cash-flow implications for business of real-time payments”.

“We want to make sure we get this right because we understand Single Touch Payroll will be a large change for all businesses, especially small business,” Billson said.

Paul Drum, head of policy at CPA Australia, welcome Billson’s announcement, telling SmartCompany it strikes the right balance between reducing red tape for businesses and meeting the government’s objective, while not putting an “unnecessary financial burden on small business”.

“A good outcome all around,” Drum says.

“Minister Billson should be applauded for listening to the needs of Australian businesses and acting on them.”

Drum says the original proposal, which would have made it mandatory for businesses to pay PAYG withholding and employee superannuation payments in real time, would have “created very real cash flow problems for Australian small businesses”.

“This would have put a brake on Australian small businesses at a time when many are already struggling to make ends meet,” he says.

But Drum says it makes sense to include real-time reporting of PAYG withholding tax obligations by small businesses in the scheme, as this will “further reduce the compliance burden currently faced by employers.”