ATO pushing ahead with plans to introduce real-time payroll reporting

The Australian Tax Office is pushing ahead with its plans to introduce mandatory real-time payroll reporting for businesses, with ATO second commissioner Geoff Leeper saying yesterday there are “profound economic benefits” from the proposed system.

Fortnightly payroll reporting is one aspect of the federal government’s proposed Single Touch Payroll Scheme, which had previously been slated for commencement in July 2016.

Under the scheme, electronic accounting software used by businesses would automatically report payroll information to the ATO when employees are paid, eliminating the need for employers to report employee-related Pay-As-You-Go Withholding (PAYG) in activity statements throughout the year or employee payment summaries at the end of the year.

The proposed Single Touch Payroll Scheme had also included a requirement for businesses to make mandatory real-time payments, however, former Small Business Minister Bruce Billson said in June the government would not proceed with that aspect of the scheme and would instead consult further with industry.

Leeper confirmed this at a Smithink accountants’ technology conference in Sydney on Tuesday.

“The [industry] consultation was very clear – for heaven’s sake be careful on cash flow – and we get that message,” Leeper said, according to Fairfax.

Leeper said the ATO is still working towards implementing real-time payroll reporting, which he said is “worth doing in its own right” as a way of matching data between government departments.

“Single-touch payroll automates the exchange of information from an employer through us to the Department of Human Services,” Leeper said.

“No more unemployment form. No more income reporting.”

A spokesperson for the ATO told SmartCompany today the scope and timing of the Single Touch Payroll scheme is still being finalised.

“Consultation is continuing on the scope and timing for the Single Touch Payroll initiative and the feasibility of conducting targeted pilots subject to a final Government decision to proceed with the initiative,” the spokesperson says. 

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany this morning the small business community is “very comfortable” with the prospect of real-time payroll reporting but only “as long as the software is ready” for business to use.

Strong says there is still plenty of work to do to get to that point.

Alex Malley, chief executive of CPA Australia, told SmartCompany this morning the changes to the scheme announced by Billson in June, including potentially undertaking pilots of the scheme from July 2016, was “sensible” and struck “the right balance between reducing red tape for businesses and the meeting the government’s objective”.

“We were supportive of dropping mandatory real-time payment because of cash flow concerns and we’re supportive of moving ahead with real-time reporting of employment obligations including PAYG withholding tax obligations,” Malley says.

“There are clear benefits here because automatic reporting of many employment obligations will reduce the compliance burden currently faced by employers.”

Malley says CPA Australia will continue to monitor the roll-out of the scheme “with a close eye on the availability of appropriate software and how businesses adjust their pay cycles to manage the new processes”.

“Innovation in the tax administration, underpinned by meaningful consultation and engagement with stakeholders such as was demonstrated by former Minister Billson, is to be applauded,” Malley says. 

*This article was updated at 1.35pm on October 14 to include a response from the ATO.