Single Touch Payroll nightmare for small business

Australia’s new regulations for payroll will soon apply to all businesses with at least 20 employees.

In short, you will meet your obligation by sending the Australian Taxation Office (ATO) an electronic message at the time employees are paid. That transaction must contain all details of each employee’s gross, tax and net payments as well as superannuation, and lastly, details of new employees and terminations.

Employers currently report Pay As You Go (PAYG) withholdings via their Business Activity Statement (BAS) but under the new STP scheme, this information will be submitted to the ATO at each pay event, via your payroll software or payroll service provider.

Once fully implemented, Single Touch Payroll (STP) will negate the need for businesses to produce PAYG Payment Summaries for employees and will provide the ATO with a substantial real-time level of granularity on every payroll transaction across This may sound good but like many things the devil is in the detail.

For a start this starts on 1 July if you have more than 20 employees. However, casuals and part-timers are counted in this figure so for instance you may just be a pizza restaurant that hires people to deliver pizzas and suddenly you're classified as a large employer.

One must also ask why do the ATO need all this information. It has all been provided anyway. A number of people have indicated there will be greater surveillance on business and greater fines and there has even been talk about criminal charges being applied to business. Under this sort of pressure, people need to think they really want to be in business or are they just better off being an employee.

This is just more red tape. Call it what you like, but it will hit small business hard because if they fail to comply, there will be large fines.

The best chance small business has is to comply with this system, and I strongly suggest you visit your local TaxAssist Accountant for advice and guidance in this area.

Date published 14 Jun 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.