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”