BUSINESS owners have until July 1 to get their single touch payroll system in place with the Australian Taxation Office (ATO).
RSM Australia consultant Carol Dall, Quairading, told the Quairading CRC Farm Office Affairs day recently how small businesses could take their next step to be up to date with the ATO.
Ms Dall said businesses which have more than 20 employees started Single Touch Payroll systems from April 1, 2018, as required by the ATO.
"A number of small farm businesses are already doing it but it's not compulsory until July 1, 2019," Ms Dall said.
"There is an exemption in place for micro businesses of one to four employees, which can delay the process for two years.
"If that's the case and you want to apply for an exemption, I would recommend lodging an exemption now because the tax office will get swamped with exemption requests."
Ms Dall said under the exemption an accountant can lodge the requirements quarterly but she believed the decision would only be delaying the inevitable.
"The tax office is saying in two years that all businesses will need to be on the single touch payroll system, even if they employee one person a year," she said.
"Basically it's the tax office making us accountable for paying our employees and making sure we are reporting our super, our tax and anything in regards to our employees.
"Every pay run that we do, we need to report what we pay our employees."
Ms Dall said the process would need to be reported digitally which would make it easier and more efficient.
"You process the pay, press a button and it goes to the tax office," she said.
"The real process is setting up single touch payroll within your accounting software.
"If you are not using a single touch payroll compatible software, you will need it."
Ms Dall stressed the importance of having all employees included in the books to be reported to the tax office.
One of the biggest challenges, especially for small farming operations, was seasonal workers who can work for six weeks and are sometimes paid at the end of a work period.
"They will tell you how many hours they did and you pay them for that," Ms Dall said.
"But the tax office doesn't want people to do that and you will need to work out if you are paying people weekly, fortnightly or monthly and that's the only option."
It's also important to have all the employee's information in the new system.
Ms Dall said to ensure the relevant tax declaration was completed and employees received a superannuation choice form.
She said some of the software programs have a section where a tax declaration can be filled in and filed to an employee - which can make the process easier.
Ms Dall said the ATO would start to pay closer attention to whether someone was an employee or a contractor.
"You might have a contractor but you are liable to pay them super and everything like that," she said.
"There is a good tool on the tax office website to determine if someone is an employee or contractor."
But there are some positives to the new changes, with the ATO giving business an 18-month leeway.
"If you make a mistake while you are doing your pay run it can be fixed," she said.
"They will be pretty lenient with late lodgements or no lodgements, so basically the next 18 months is to get the systems in check.
"But from 2021, you will need to have it sorted."
Ms Dall said the ATO single touch payroll system would be recorded on every pay run.
She suggested businesses with multiple employees should pay all employees on the same day and with the same frequency to stop double handling in the system.
She also said it was a requirement to be giving employees a payslip after every pay run.
