You may have seen recent media reporting about One Touch Payroll being introduced form 1 July this year. So what is it and who is affected?
One Touch Payroll is basically builds upon the growing trend of data sharing called Block Chain and is an evolution of payroll functions within accounting software building upon recent changes to how superannuation payments are made and builds upon Standard Business Reporting (SBR) infrastructure aimed to make it easier for businesses to report to regulators such as the Australian Taxation Office (ATO)
The idea is employers will report wages they pay for each individual employee to the ATO as they make the payment. At the end of each financial year, employers will have the option of completing payment summaries just like they always have or make a declaration the information already sent through is correct, in which case, the ATO will effectively add up the numbers and make it available to employees and tax agents.
One Touch Payroll will be compulsory for employers with 20 or more employees on 1 July 2018 with smaller employers becoming required to use it from 1 July 2019.
- Data available for employees quicker to prepare their returns
- Easier for the ATO to identify employers not reporting and paying correct Withholding Tax
- Information available to workers if an employer goes into bankruptcy or is closed
- Solves the issue of employees not receiving payment summaries due to having moved
- More numbers to potentially be added up incorrectly
- Extra red tape
- Extra costs to small organisations
The idea of One Touch Payroll is terrific in theory and should resolve issues faced by workers who for varying reasons don’t receive their payment summary in a timely manner at the end the financial year.
We anticipate it is going to cause significant problems and frustration for both employers and employees at least for the first couple of years while some of the kinks we have identified as cons are worked through.
The biggest problem with the evolution of how the ATO requires information to be reported to them is how unfair it is on small organisations which do not to use up to date software options simply because their size makes old fashion ways easier and/or more cost effective.
Tax legislation requires taxpayers to produce records to the ATO (when requested) in paper and in English and at the same time they are forcing people to use electronic means when it suits them. An issue we have raised directly with the ATO on more than one occasion but is, realistically, unlikely to change.
If you would like more information on One Touch Payroll and your obligations, we’d love to hear from you.