Beyond the basics: Advanced Implications of Single Touch Payroll for SMBs

With Single Touch Payroll (STP) on the horizon for all Australian businesses, it will have
different implications for different owners. We spoke to the experts from the Australian
Taxation Office (ATO) about some of the advanced elements of STP.

For some, it will mean little more than hitting an extra key each pay run. For others, it
will usher in a new chapter in managing outstanding debt with the ATO.

So beyond the basics of Single Touch Payroll, what can Australian small businesses
expect for the new financial year?

The hard deadline for STP adoption

The ATO wants all small businesses with 19 employees or fewer to begin using Single
Touch Payroll from 1 July 2019, with a deadline of 30 September 2019.

In what has been described as the biggest shake-up to the tax system in 20 years, STP
will give the ATO visibility over employees’ gross, net, tax and superannuation details.

A spokesman for the ATO said it would allow for “the earlier identification of late and
non-payment of tax and super amounts by employers, which should make any debts
easier to pay”.

Who will STP impact most?

While this reform will have little impact on businesses that have their finances in order,
it’s a different story for business owners that may be struggling with cash flow or trying
to repay a large tax debt, as they will be under pressure to clean the slate with the ATO
on a regular basis.

But there is good news. The ATO says Single Touch Payroll will help employers identify
small problems, such as unpaid superannuation liabilities, before they get out of control.

It’s been speculated that the rollout of Single Touch Payroll could save the government
billions of dollars. While the ATO has been tight-lipped about any specific targets, it’s
likely that those billions of dollars will come straight out of the pockets of business

“It is difficult to quantify at this stage what impact this will have on the outstanding
debts of business to the ATO given the range of factors that influence a business’s
capacity to pay,” an ATO spokesperson said.

The ATO no longer an option as short-term creditor

Australian businesses owe the ATO $23.7 billion, with small business accounting for
well over half that amount ($15.1 billion). Single Touch Payroll will give the ATO instant
visibility over outstanding debts, and when they identify a problem they will seek to
address it promptly.

Dealing with the ATO is a serious and unavoidable part of doing business, so it’s
important every business owner takes the ATO’s questions seriously and deals with
them promptly. The STP crackdown will see businesses with lumpy cash flow pressured
to clear their debts to the ATO sooner.

Possibility of payment plans

In a positive move, small business owners who are struggling with outstanding ATO
debts may be able to arrange a payment plan. The ATO put in place some 790,000
payment plans throughout 2017–18.

The ATO also recently lifted the ceiling for arranging a payment plan through an
automated phone call from $25,000 to $100,000. But if you have a debt greater than
$100,000, you will need to call the ATO and discuss your situation personally.

It’s important to remember that payment plans are suitable for some businesses –
but not all. If your small business has cash flow problems, a business loan from an
alternative lender may be able to help you clear your ATO debt before the 30 September

What happens if you fail to pay on time?

If your small business has a plan in place but you default and can’t pay the ATO on time,
you will be charged interest on your debt. Your case may also be referred to a debtcollection agency.

In a worse-case-scenario, you may have your assets taken via a garnishee order, which
means the ATO can take what is owed from your bank account. But don’t fret just yet –
the ATO says it only issues garnishee notices in 1.1% of cases and is considered the last

Having said that, the ATO is a meticulous and powerful government body that will use
every tool at its disposal to recover any debts owed. Their resources are also virtually
limitless, with the latest Federal Budget committing an extra billion dollars in funding
to the ATO.

SMB credit ratings may suffer

In the past, the ATO was not allowed to share information about your debts with third
parties, such as credit rating agencies. However, there is now legislation waiting to be
passed that will allow the ATO to do just that if you fail to engage with them.

For small business owners who don’t follow the rules, the result could be damage to
their credit rating and an increased cost of credit.

The bottom line

Overall, Single Touch Payroll is a positive development that will boost productivity
and bring payroll into the 21st century. Small businesses will no longer have large ATO
debts hanging over their heads, and credits will likewise be returned quickly and more

It will also see all employees get paid their legislated superannuation benefits and will
ensure no small business has an unfair advantage over the majority of owners who pay
on time.

To avoid damaging your credit rating, talk to your broker about whether a small business
loan could get you back on track.

Chris Connolly
Connolly Wealth Management
Level 1, 441 South Road
Bentleigh  VIC  3204
(P) 03 9591 8000
(F) 03 9530 8375



Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.


The information on this website is provided for general information only and does not take into account your personal situation. You should
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What Does the Coalition’s Win Mean for You?

Now that the Coalition has had an unforeseen,  re-election, what does it mean for borrowers and homeowners of Australia?

There is no doubt that the key policy battle ground during the election campaign was on housing.

Labor’s platform was that investors weren’t somehow “worthy” of negative gearing taxation benefits, even though it has been a policy for anyone with income producing assets for decades.

Likewise, the vast majority of property investors only own one dwelling, so being portrayed as “greedy” was never going to sit well with about 1.7 million Aussies.

The Coalition had a fight on its hand to convince the voting public that investors weren’t to blame for high property prices, but they ultimately prevailed.

Deposit help

First Home

This was also partly due to their announcement of the First Home Loan Deposit Scheme six days before the election.

The policy will guarantee deposits of up to 20 per cent for first-timers who have saved five per cent and earn under $120,000 for singles and $200,000 for couples.

The scheme is due to come into effect on 1 January 2020, which will likely require applicants to be pre-approved as well as buy dwellings within certain price ranges.

Tax cuts on the way

Apart from housing, the Coalition’s election platform was fundamentally about the economy, with policies to increase jobs and deliver tax cuts, all the while restoring the budget to surplus.

Some of the major policies include tax relief for low and middle-income earners, with a tax offset implemented from 1 July that is forecast to provide $1,080 for about 4.5 million workers.

Tax Cut

In fact, the Coalition’s longer-term tax plan will see about 94 per cent of taxpayers pay no more than 30 cents in the dollar.

When it comes to small businesses with an annual turnover under $50 million, the Coalition plans to reduce the company tax rate to 25 per cent.

It will also implement an instant asset write-off to $30,000, which will be expanded to medium-sized businesses as well.

The policy aims to help small and medium businesses invest in the machinery and equipment they need to grow.

Returning the budget to surplus will assist the government to create 1.25 million jobs over the next five years as well as invest $100 billion in major infrastructure projects across the country, according to their election policies.

Where to from here?

A returned Coalition government will provide some much-needed stability for our economy, but its promises and policies are only part of the solution.

Firstly, that’s because there will need to be cross bench support for many of these ideas to become a legislated reality.


Ditto, when it comes to the Senate, which ultimately decides which policies become laws and which become also-rans.

That said, in the lead-up to the election, it was clear that the Senate had more in common with the Coalition’s policies than the Australian Labor Party’s so many of these policies might get over the legal line.

The First Home Loan Deposit Scheme is one policy that has the potential to stimulate activity in the property market, but there needs to be others.

The economy, while reporting low unemployment rates, continues to tread water at best.

Wage growth is benign as is inflation, which recently hit zero. Government stimulus is required and action needs to be taken.

While some people think this is a good thing because prices aren’t going up, it actually means that the economy is going backwards to a degree.

The Reserve Bank is also ready to pull the trigger on an interest rate cut or two, but it really doesn’t have enough left in the tank to make much of a difference economically.

That’s why the re-elected government needs to create fiscal and regulatory stimulus packages as well.

There are brightest minds than mine that can determine what these need to be, but one of the easiest to implement would be to get banks’ lending again by halting the ridiculous hoops that good borrowers are still having to jump through.

We want a balanced market where both 1st homeowners can get into the market and investors can still prosper as these fundamentally point to the “great Australian dream.”

We look forward to seeing what ScoMo and the Liberals do in the next 100 days in power and what it sees fit to follow through on and what it doesn’t. Watch this space everyone…

Chris Connolly
Connolly Wealth Management
Level 1, 441 South Road
Bentleigh  VIC  3204

(P) 03 9591 8000
(F) 03 9530 8375

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products


Sources: Intuitive Finance; The Property Investors Choice