Single Touch Payroll Now Applies to All Employers
Single Touch Payroll is being enforced for every business that has payroll for employees. It has been operating for nearly 2 years, with the 2019 financial year being the year it was compulsory for large employers and 2020 financial year being the year it was compulsory for everybody. This system is basically connecting the Australian Taxation Office (ATO) with every employer who then provide the ATO with details on every pay to every employee each pay period including superannuation amounts.
The system works via software which is fairly basic. However in practice, every software provider now has to provide the ability for an employer to be able to have a system which report this information to the ATO for each employee but different software providers have different methods of achieve this interaction. The issue is not so much for the employers to deal with, because the ATO has been working behind the scenes with every software provider so they incorporate this into the platform. From 1 July 2020 the ATO will use this information to prefill the W1 and W2 information on the Business Activity Statements (BAS) for businesses that lodge activity statements.
Single Touch Payroll was implemented to deal with a host of issues that the ATO and government are taking a greater interest in, particularly the provision and payment of superannuation, the interaction between transfer payments from the government to individuals for the various benefits they can access and also child support issues. It is an efficiency drive to better connect parts of the economy which previously were not connected or able to be connected without a lot of effort between the various organisations and to avoid issues of under or over payments to be dealt with on a timely basis or avoid people attempting to obtain benefits they would not otherwise be provided or make them pay for obligations they may try and avoid.
Single Touch Payroll has been an extremely staggered process from 1 July 2018 for employers who employ more than 20 employees, and 1 July 2019 for everyone else and not for profit employers having a commencement date from 30 September 2019. The ATO have taken a very soft approach and the 2020 financial year will be lots of education and explanation of the process with regular encouragement to join the program voluntarily. From 1 July 2020 however, the advice from the ATO is that they will start attempting to force all employers onto this with penalties or other provisions to ensure compliance occurs.
Currently nothing will occur if you are not on Single Touch Payroll, however this is a temporary measure and will change as the ATO's focus changes from encouragement to compulsion as they require employers, with less than 20 employees, to start reporting via Single Touch Payroll by the end of September 2019.
A few exemptions exist from the system, however this requires significant hurdles to access them and this revolves around unreliable and unusable internet facilities which will require evidence that they are not reliable. The ATO's opinion is that micro employers with less than four employees report that information to the ATO through their BAS or tax agent.
If you have any questions relating to Single Touch Payroll, please contact us.
Disclosure of Business Tax Debts - On the Way
The House of Representatives has passed legislation which is now awaiting approval by the Senate which will enable the Taxation Office to disclose tax debt information of a taxpayer to credit reporting bureaus when certain conditions and safeguards are satisfied.
This legislation will allow tax debts to be placed on a similar footing as other debts, strengthening the incentives for businesses to pay tax debts in a timely manner and effectively engage with the Australian Taxation Office to avoid the business' tax debt information being disclosed to credit reporting agencies.
The government has indicated that the legislation will be backdated to when the 2018/19 mid-year economic and fiscal outlook was tabled.
Contact from the ATO
We have been informed by some clients about various phone scams involving the ATO. Never give any sensitive information to the person on the other end including your tax file number, bank account details or credit card details. We encourage you to be sceptical of all calls suggesting they are from the ATO. If you are unsure, just ask them to call us as your tax agents. You will not need to provide our details as they should already have them available.
Some things you should be aware of when taking calls from the ATO:
- The ATO will never threaten you with immediate arrest.
- The ATO will never send unsolicited pre-recorded messages to your phone.
- Calls originating from the ATO do not show a number on caller ID.
- The ATO will never insist you stay on the line until a payment is made.
- The ATO will never prevent you from discussing your affairs with us as your tax agents.
- The ATO will never request payment of a debt via iTunes, Google Play cards or other vouchers.
- The ATO do not accept payment in cryptocurrency.
If you are uncertain with any dealing with the ATO, we encourage you to give us a call.
CRM Systems Help
Growing businesses appreciate the assistance that a Customer Relationship Management system (CRM) gives them in organising retention of records on prospects and ultimately customers.
Within a CRM system you can enter details of your prospects/leads and file all correspondence that you have initiated with a prospect and later a customer.
If you conduct a marketing campaign whereby you are sending newsletters to your prospects/leads, you can process the campaign by the CRM system which will then maintain a permanent record that a newsletter was sent to the prospect on a particular date.
Salespeople can record details of telephone conversations with prospects within the CRM system.
The alternative to a computerised CRM system is having notes on bits of paper and in handwritten files. This all becomes unwieldy and usually cannot be used for a coordinated mailout of a newsletter and supplying information very quickly on a particular prospect or customer with links available to the prospect or customer's website, so that whenever anyone wishes to communicate with an individual prospect or customer they can gain an update on the latest communications and feedback, if any, from the prospect or customer, before making contact with the prospect or customer.
Most CRM systems enable the recording of prospects/leads in a separate category from customers which facilitates conducting a coordinated marketing campaign with prospects/leads.
Reducing Debtors' Days Outstanding
One of the real problems for businesses that have to give credit to customers is the amount of money owed by customers. Of course, those customers are then called "debtors".
There are a number of strategies to reduce debtors' days outstanding.
An effective debtors' management system goes right back to the beginning of your relationship with a new customer.
A prospective new customer should be invited to complete a "Credit Application Form". This form should be submitted to your business prior to any credit being extended to the prospective new customer.
An office team member, who has been adequately trained, should check the "Credit Application Form" and should forward the completed review of the "Credit Application Form" to a manager to authorise the level of credit to be given to this new customer.
It's a good idea to prepare a "Welcome to New Customer" letter which should include details of your credit policies, including the credit limit and number of days credit that you are offering to this new customer.
As part of the "Welcome to New Customer" letter a "Terms of Trade Agreement" and "Retention of Title Agreement" should also be prepared so that these items are sent at the same time to the new customer with a request that the original copy of the Terms of Trade Agreement and Retention of Title Agreement are signed and returned to your office within 7 days.
There should be a procedure, which has been agreed to by the management team, for a decision to be made as to whether to register this new customer on the Personal Property Securities Register.
If the new customer falls within the category that your system indicates should be registered on the Personal Property Securities Register, the person responsible for this needs to ensure that the necessary registration is completed within the stipulated period of 15 business days.
One of the keys to ensuring prompt payment of tax invoices is to ensure that an accurate tax invoice is prepared promptly after any goods or services are provided to a customer, particularly a new customer and that any additional information that the new customer has specified they require, is attached to the tax invoice and sent to the customer. It is not a good idea to wait until the end of the month to send tax invoices to a customer – particularly a new customer, because this will convey to them that debt collection is not a high priority in your business and they'll probably hold payments back – thus getting into some very bad habits!
On the tax invoice it's a good idea to stamp the date that payment is expected, based on your agreed payment terms with this customer.
If you are sending statements to customers at the end of the month, these should be prepared within 48 hours of the end of the month and urgently sent to your customers. It is acceptable to send debtors' statements by email.
The system should be that the business' overall debtors' days outstanding is calculated at the end of the month and that individual debtor's days outstanding are also able to be calculated. Prompt follow-up of customers relative to their outstanding payments will normally mean that debtors' balances are reduced, thus reducing the overall "debtors' days outstanding."
Sundry debtors is normally one of the biggest components of a business' investment in working capital, which can tie up a lot of money for a business. The development of an appropriate debtors' management system and then ensuring that the system operates promptly and effectively, is the key to reducing debtors' days outstanding.