Federal Parliament has passed legislation announcing all businesses with 19 or fewer employees will now have to report under the Single Touch Payroll system by 1 July 2019. Businesses with 20 or more employees came under reporting requirements in July 2018.
The new legislation will make it mandatory for all Australian small businesses to send digital payroll reports in real-time to the ATO every payday and is expected to push more small businesses to digitise their payroll processing by the deadline.
The move has been welcomed by the Institute of Public Accountants who suggest digitisation is of benefit to businesses big and small.
“While it is appreciated that not all small or micro businesses are digitally ready for STP, their accountant is in the driver’s seat to assist them to meet these new reporting obligations,” said IPA chief executive, Andrew Conway.
“In fact, some 30 per cent of small businesses are still not on a digital platform and while cost may be a factor, some may well be missing out on many efficiencies and productivity benefits that could help their business grow.”
Conway’s comment is supported by recent research by cloud accounting solution Xero, which shows STP could unlock 1 million hours of small business productivity per week, worth $1.35 billion annually.
Xero’s new State of Payroll Report shows one in five small businesses are still using pen and paper to manage their payroll, likely contributing to the nearly 2 million payroll errors made every year by small businesses.
While more than half (51 per cent) of small businesses said digitising payroll has helped their business save money. One in three said it has increased their profitability and revenue.
Trent Innes, Managing Director of Xero Australia, said the move to STP is the biggest legislative change for small businesses since the introduction of the GST.
“The Australian government has been working with digital software providers and advisers to keep pace with small business innovation at a national level. As a result, digital connectivity is transitioning from a small business nice-to-have to a have-to-have.
“Technology is empowering people to take more control over their business, operate with more accuracy, security and efficiency – and by doing so creating a greater impact for themselves, their community and their economy,” he said.