The arrival of Single Touch Payroll is being described as one of the biggest revolutions in tax since the GST was introduced in July 2000. If you’re using accounting software like MYOB or XERO this should be a relatively straight forward change and one that businesses with more than 20 employees will already have adapted to. It’s the implications of this change and the visibility the ATO will now have that business owners should be mindful of.
Single Touch Payroll will provide the ATO with real-time information whenever payroll is completed. This means the ATO will receive a range of information, including gross, tax, net and superannuation details. This is important because, due to a whole range of factors, not all businesses pay superannuation entitlements in accordance with the law or on time. Unpaid superannuation liabilities were also singled out in the recent Federal Budget. The ATO will be provided with additional funding to pursue businesses for not meeting their obligations.
The ATO says it’s owed $23.7 billion from Australian businesses, with small businesses accounting for $15.1 billion of that figure – well over half. Having instant visibility means the ATO is in a better position to manage debtors and have fewer debts outstanding.
Many small businesses will be all too aware of the stress they can experience when being pursued by the ATO for outstanding monies. Having an outstanding debt with the tax office will result in mainstream lenders refusing to lend to a small business for both commercial and personal reasons (like refinancing the family home). Additionally it can make lending for equipment and machinery more difficult to obtain and more expensive. These reasons, a one size fits all approach from the ATO combined with heavy interest penalties for late payments is a reason many business owners come to us seeking a loan to payout tax debt or an alternative cash flow solution. With politicians looking for a quick way to improve the budget bottom line it’s a service that business owners are going to need more and more.
If your small business is being weighed down by a tax debt or needing a cash flow solution that helps you over the growing pains you can reach Jeff at email@example.com or mobile 0439 062 771.
Disclaimer: this article is opinion only and should not be regarded as professional advice or a relied upon in any way. You should obtain professional advice before making decisions about your business and personal affairs.