Single Touch Payroll is giving employees greater transparency and the Australian Tax Office more control.
Employees are losing out on millions every year in unpaid super thanks to a loophole that allows employers to hold back on superannuation contributions until the end of the quarter instead of paying them with wages.
The analysis performed by Industry Super Australia (ISA) found that 2.98 million people are missing out on their super payments.
For a 20-year-old, this would equate to a loss of $12,475 by retirement due to contributions paid quarterly instead of fortnightly.
ISA chief executive Bernie Dean says that while most employers are doing the right thing, legally employers are allowed to hold onto super payments, and unscrupulous employers use this to their advantage.
“Even though a contribution may appear on your pay slip, an employer is not compelled by law to pay that contribution into your super account until the end of the quarter,” says Mr Dean.
He also said that if employees aren’t on the front foot about their super contributions, and payments weren’t being made, a business could get away with not paying super.
But ISA and other superannuation funds are taking their own measures to ensure employees are paid their super, using rigorous processes to identify non-compliant employers.
Changes to the laws on super contributions
They are also calling for the laws to be changed so that when an employee is paid their salary, their super contributions are also paid into their fund at the same time.
The surge in unpaid super has been highlighted to the ATO and it’s important you don’t risk being caught unawares.
Even if you think you’re doing the right thing, it’s best to be proactive and put measures in place to ensure you’re paying your employees’ super contributions accurately.
This also presents a big opportunity.
Many employers still use a combination of spreadsheets, paper ATO tax tables and Post-It notes to process payroll. They have yet to embrace cloud-based solutions that save time and simplify their lives.
In fact, according to the ATO, some 90,000 micro-businesses use no software at all.
We are already seeing an explosion of Single Touch Payroll (STP) solutions available in the market from early this year.
These solutions may include mobile apps, simple reporting solutions and portals.
They can also provide you with online tools to track workers’ hours and approve leave, offer controlled access for employees, reimburse expenses, and be SuperStream compliant.
The ATO will be contacting employers shortly, letting them know what the change means and how you can start getting ready.
We advise the following:
- – Employers with payroll software to check if their software offers STP reporting.
- – Employers without payroll software to choose a STP-enabled payroll solution
If you have any questions about STP and how it will affect you, just talk to our data analytics team for advice on the best solution for you.
Please call us on 07 5596 9070 or email email@example.com