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The Institute of Public Accountants (IPA) has warned against a one-size-fits-all approach to the government’s proposed Single Touch Payroll (STP), saying the initiative could have significant cash flow consequences for some small businesses.
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IPA issues cash flow warning for Single Touch Payroll
10 March 2015
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8 minute read
IPA chief executive officer Andrew Conway has called for more thought around the issue, saying a one-size-fits-all approach seldom works for the small business sector.
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“While it is a move to cut red tape for some employers by simplifying tax and superannuation reporting obligations, the reality is that Single Touch Payroll will do the opposite for many micro and small businesses,” Mr Conway said.
The IPA has said that many small businesses currently do not operate computer systems to drive their payroll and superannuation requirements, and as such, the cost of setting up technology, training, software and internet subscriptions, systems and processes needs to be factored in.
“A lot of small businesses use intermediaries to perform their payroll obligations which will drive up their cost of using such providers if the frequency of reporting increases."
Mr Conway questioned the assumption that most businesses have access to affordable cloud-based software with a reliable internet connection, suggesting this is not the case for all business operators.
“The more frequent PAYG withholding and super payments will also have significant adverse cash-flow consequences for the small business sector," he said.
“We have received significant feedback from IPA members who are expressing their concerns and we have committed to ongoing consultation with the Government to ensure an appropriate process is put in place.
“For some businesses it will work quite well, but in the case of many small and micro businesses, this may be a case of cutting red tape and ending up with multiple pieces of red tape” Mr Conway said.
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