Single touch payroll not right for every user
The Government’s proposed Single Touch Payroll is sound in principle but needs to be thought through carefully to avoid increasing the burden on many small businesses, according to the Institute of Public Accountants (IPA).
“A one size fits all approach seldom works for the small business sector,” said IPA chief executive officer, Andrew Conway.
“While it is a move to cut red tape for some employers by simplifying tax and superannuation reporting obligations, the reality is that Single Touch Payroll will do the opposite for many micro and small businesses.
“Despite the introduction of the GST back in 2000, many small businesses do not operate computer systems to drive their payroll and superannuation requirements so the cost of setting up technology, training, software and internet subscriptions, systems and processes needs to be factored in.
“A lot of small businesses use intermediaries to perform their payroll obligations which will drive up their cost of using such providers if the frequency of reporting increases.
“The assumption that most businesses have access to affordable cloud based software with a reliable internet connection is not a reality for all business operators.
“The more frequent PAYG withholding and super payments will also have significant adverse cash flow consequences on the small business sector.
“We have received significant feedback from IPA members who are expressing their concerns and we have committed to ongoing consultation with the Government to ensure an appropriate process is put in place.
“For some businesses it will work quite well but in the case of many small and micro businesses, this may be a case of cutting red tape and ending up with multiple pieces of red tape” said Mr Conway.