Small businesses warned as tax deadline draws near, says ATO

The deadline is looming for small business owners to switch to a new digital payroll reporting system, but hundreds of thousands have not yet made the move.

Small business bosses have been given a two-week deadline by the Australian Taxation Office to start using a mandatory new digital payroll reporting system, but hundreds of thousands have not yet made the move.

The ATO says small employers — with 19 or fewer employees — should start using single touch payroll by September 30.

The digital STP system sends tax and superannuation data to the ATO every payday and also spells an end to paper payment summaries (group certificates).

The changes started on July 1 and affects 700,000 small businesses, but the ATO says about half haven’t yet moved across to STP, which big businesses started last year.

However, the Tax Office won’t yet be hitting business owners with fines and other penalties as it adopts a lenient approach with STP stragglers.

Small businesses now need to inform the ATO of their wages and super every payday.

“We are being flexible,” ATO assistant commissioner Jason Lucchese said yesterday.

“We understand a move to real-time digital reporting is a big change, especially for smaller employers,” he said.

“There can be a general level of apprehension and uncertainty, but employers have found it fairly easy to set up and get under way.”

Mr Lucchese said some small business employers had been unsure if they needed full payroll software to switch to STP.

“That’s not the case — there are a range of solutions available,” he said.

The ATO has information about STP and low-cost or no-cost alternatives for micro employers at ato.gov.au/stp and will also allow deferrals for businesses struggling to switch.

Anyone who hasn’t moved by September 30 can expect to be contacted by the ATO, although it has said that no penalties would apply during the transition period to June 30 next year.

Accounting software group Xero’s head of industry, Matthew Prouse, said he expected about 80 per cent of small employers would be using STP by September 30.

“The number of businesses (switching to) STP is measured in the thousands per day and that’s accelerating,” he said.

However, about 140,000 small business owners are unlikely to have switched by the ATO deadline.

“We would encourage small businesses to do it — it’s just one click,” Mr Prouse said.

Institute of Certified Bookkeepers executive director Matthew Addison said single touch payroll-enabled software should easily help businesses report each payday to the ATO.

“We are finding that with a little bit of preparation and knowledge, bookkeepers and employers can implement and manage STP with minimal interruption,” he said.