Single touch payroll is coming!
In recent times there has been significant discussion around a number of reforms introduced as part of the Treasury Laws Amendment (2018 Measures No. 4) Bill and the impact they would have had on company directors and the business community. Of particular interest has been the extension of Single Touch Payroll reporting, and the increase in penalties for directors who do not pay superannuation.
While much of the discussion has been centred around the impacts of the changes on business, we see the automation of reporting of PAYG and superannuation as well as the need for directors to maintain greater control over their super obligations as a positive change. Ensuring company directors are both aware of issues facing their business sooner, and encouraging them to take corrective action. Directors will be unable to simply ignore issues by not reporting. The good news is that this will encourage businesses under financial pressure to effectively pursue informal turnaround options earlier.
For any business in need of a turnaround plan, time is almost always the major determining factor in consideration of the options available. Business owners who identify issues early have many tools available to assist the business in returning to profitable and sustainable operation. In contrast, those who fail to act may not be able to save the business at all.
So What Are The Changes?
Single Touch Payroll
Single Touch Payroll commenced for employers with twenty or more staff on 1 July 2018 and will be expanded to cover smaller employers from 1 July 2019. The regime will see reporting sent to the ATO with every payroll completed by the business for PAYG and Superannuation obligations, along with additional employee pay information.
While this information will be reported regularly to the ATO, it is important to note that business owners will still need to lodge their BAS, IAS and SGC reporting. This is critical if they wish to be able to avail of options to remit personal liability under the Director Penalty regime. Historically business owners have been able to lodge these reports up to three months after the due date and avoid a Lockdown Director Penalty liability. Business owners will now have to ensure a Superannuation Guarantee Charge statement is lodged on or before the due date to achieve the same protection. (Note: the due date for lodgement of the Superannuation Guarantee Charge statement is one month from the due date of the superannuation payment.)
In relation to Lockdown Director Penalty liability for PAYG, interestingly there is currently no change to the three month rule.
Penalties for Non-Payment of Superannuation
One of the other key items of the change in legislation was the increase in consequence for directors and employers who fail to pay their employees superannuation. Under these changes the Commissioner of Taxation now has the ability to give written direction to an employer to pay superannuation, with penalties for non-compliance including fines of up to $10,500, 12 months imprisonment or both. Additionally the Commissioner now has the power to direct employers to undertake a course of education.
What Does This Mean For Your Clients?
Early identification of issues is critical for business owners faced with financial difficulty. It can mean the difference between having to make minor adjustments to the expenses or pricing strategy, or having both the company and its directors face formal insolvency.
Business owners that are distracted on the ‘day to day’ may fail to see their own early warning signs.
With the legislative changes that have now come into effect it is important to ensure your client’s are acting in a manner which minimises risk to both their business, and them personally as company directors.
It is critically important that your clients are ensuring they lodge their Superannuation Guarantee Statements on or before the due date and their BAS or IAS within three months of the due date. Whether your clients are currently experiencing financial difficulty or not, this is simply prudent risk management. We have also written previously about the importance of keeping the company’s ASIC records up to date as this is critical in ensuring correspondence such as a Director Penalty Notice are not missed.
Where Can You Get Further Information?
- Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 – Explanatory Memorandum
- Single Touch Payroll
If your clients are experiencing financial distress now, or if the Single Touch Payroll changes bring issues to light, the highly experienced team of Turnaround Practitioners at ReGroup Solutions have a wealth of tools and knowledge that will help them manage their business and personal risk, and return their business to a profitable and sustainable operation.
ReGroup Solutions offers obligation free meetings with your clients, and will provide them with a detailed written recommendation at no cost. If you believe your clients could benefit from our involvement please contact Ben Heaney or Michael Durbridge on 1300 279 052 for a confidential discussion.