Whether you like it or not, Single Touch Payroll (STP) has been legislated as a requirement for all small businesses in Australia, from 1 July this year. I know what you’re thinking, what is STP? Does it affect me? What’s all the fuss? Don’t worry, you’re not alone. Here’s a quick look at why STP is being introduced, as well as how it will impact you.
Let’s not beat around the bush, STP has been introduced by the Australian Taxation Office (ATO) to help weed out small businesses that don’t pay superannuation or Pay-As-You-Go instalments to employees. This is on top of the ATO’s overall objective to target the “black economy”, businesses that don’t declare income, pay employees in cash and employ other tax avoidance measures.
This is only one of the strategies we know about, as there are hundreds of processes and computer-generated benchmarking tools running complex algorithms to identify businesses that fall outside of industry benchmarks and “norms.”
In a meeting in 2015 with former Federal Treasurer Joe Hockey, I spoke to him about my feelings towards businesses “not playing fair” referring to not paying tax, paying employees cash and so forth. Mr Hockey down-played my comments at the time, however the next day he was on the front cover of the newspaper that focused on the government launching several initiatives to tackle the black economy.
Two years later, I had the same conversation with Scott Morrison, who also played down my comments. Today, tackling the black economy remains as the ATO’s key objective, and it look like it will continue to do so for a while.
I mention these points as it provides business owners with a clearer context around STP. A big reason why Australia is considered one of strongest and fairest economies in the world, (that has very low levels of financial criminal activity compared to other nations) is due to the measures and initiatives taken by our regulators and governing bodies. While it may seem painful, STP is just another step in maintaining this culture of equality for all.
This is a significant step by the ATO to level the playing field for small businesses. Too long have those businesses who are “doing the right thing” been penalised, as competitors are cheating the system are able to undercut prices and pay cash to employees as incentives to work.
This is just the tip of the iceberg. It’s only a matter of time before those doing the wrong thing are caught out.
Matt Alderton, www.b-x.com.au, Founder, Bx & BxNetworking and author of “Business for Life”