STP proves time‐consuming, costly and onerous for micro employers

Tax & Super Australia (TSA) says the ATO should strongly consider exempting micro employers from having to use single touch payroll (STP) after a survey of its members that found that STP has been costly, time-consuming and overly onerous for their smaller business and micro employer clients.

Further, many members were unconvinced about the long-term benefits STP can offer these businesses.

The survey captured responses from 275 TSA members, who are mostly tax agents. It showed that while respondents had been diligent in helping their clients move to STP technology, just a third (34%) believed that it would improve the way employers report tax and super information to the ATO, with 31% believing it wouldn’t. The remaining were undecided.

Members further reported that their smaller business and micro employer clients were struggling to implement the system by themselves. The vast majority (92%) of respondents said either most, some or all of their clients needed help implementing STP. Only 8 per cent said their clients didn’t need any help.

TSA senior tax counsel John Jeffreys said the survey showed that, to date, STP is not the panacea for all ills of the payroll systems of Australian businesses, and that micro employers should be exempt from having to use it.

“A total exemption from STP should be considered for micro employers,” he said. “However, there should be compulsion to use STP if such an employer was audited and found to be making errors with their payroll.  In other words, you can keep using your current payroll system, but if you are found to be making errors, you will be forced to use STP.”

On average, TSA members spent more than 2.5 hours helping an individual client with STP. But the survey showed huge variations in time spent with clients implementing STP — the quickest cases took less than one hour and the longest took up to 15 hours or even a week. Others reported needing to provide ongoing support to clients.

Only 8 per cent said their clients had a seamless experience and now found reporting to the ATO easier. More than half (52%) said their clients had teething problems but STP was now working, yet a third (32%) reported a mostly negative experience and that STP was still not working effectively.

Meanwhile, members sighted a lack of technical knowledge (35%) and the perception that STP was too expensive and time-consuming (22%) as barriers to clients adopting STP.

“It is quite likely that some businesses, particularly those that deal in cash, will continue to pay cash to their employees, or worse still, revert to paying employees in cash, due the introduction of the STP system,” Jeffreys said.

Other reasons for not yet moving to STP included poor internet connection in regional areas, difficulties for employers who employ seasonal workers (such as farmers who hire shearers) and uncertainty about what software provider to use. Members also reported clients having problems with the software providers, and interactions between software providers and the ATO.

“There is a strong perception among our members that the only parties that will benefit from STP are the ATO and the software providers,” Jeffreys said. “The general opinion of our members is that the STP system is another step in the delegation of the administration of the Australian tax system to tax agents and accountants.”

One member’s comments to the survey perhaps sums up the feeling of all members.  This was: “STP seems to penalise those who meet their obligations now by forcing them to do it another way.”

Other member comments are listed below:

  • “There are very few software options available for when seasonal workers are employed”
  • “Very time consuming process for which the ATO does not have its own resourced allocated”
  • “Citizen Card by stealth”
  • “This has been a time consuming and burdensome exercise for my small business clients”
  • “The ATO should have created a reporting form directly on their website (or portal) and not have had small businesses purchase or learn a new package to comply”

Website Comments

  1. Rodger G Gibson
    Reply

    The lack of availability of free ATO developed software for micro employers (1-10 employees ) linked on the business portal and/or in ATO on myGov and linked to myGov ID app is a disgrace.
    Why couldn’t the ATO develop and make available STP software similar to the ATO Super streaming software which works fine and costs employers nothing to setup,access and comply.

  2. Ann Shandley
    Reply

    Hear, hear – could not agree more!! Actually sent them an email asking that question.

  3. Geoffrey Davey
    Reply

    client A: 2 employees; 1 payroll /annum (June); all pay sacrificed into super. STP has not been adopted
    client B: 4 employees (directors); 1 payroll/annum (June); pay paid in cash to directors, with group certificates; solution = cancel cash pay and work voluntary, because STP is
    onerous

  4. Duncan Smith
    Reply

    It is interesting that New Zealand provides my HR for payday reporting which I understand is similar to Super Stream.
    I also understand that NZ also has a $50,000 PAYG – W threshold before an employer is obliged to comply with STP.
    I recall that MyBusiness reported this on 04 April 2019.

    One could have the view is that the Federal Government has showed a lack of interest in how STP has been implemented and the impact on micro and small business.

    Duncan Smith

  5. Michael
    Reply

    I agree with Rodger.
    A payroll software package developed and implemented by the ATO that aligned with the SBSCH would have seemed both logical and practical.

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