.The Australian government is planning to introduce a catch-all system whereby all employers will be required on every pay day to provide electronically the full identity of each and every person working for them, including their home address and the amount paid, along with deductions for superannuation contributions and pay-as-you-go taxation.
The new measure – now in the implementation stage with chiefs at the Australian Tax Office – is seen by critics as mass surveillance of every working Australian. At present employers taking on staff have to obtain a tax file number of every new employee, and then must issue a certificate to both the employee and the ATO after the end of the tax year on June 30. Apart from changing this requirement to each pay day, Treasury is insisting on the ATO being provided with the personal details of all new or departing employees the moment they arrive or leave.
The announcement of the new arrangements trickled out following a news release issued by the assistant treasurer, Josh Frydenberg on Sunday 28 December, when most businesses were closed for the New Year holiday, and when the business media were not functioning The Australian Financial Review, for example, was out of circulation until January 2, six days later. Business TV programs were off air. Few people in the Canberra press gallery were checking their boxes.
Frydenberg also made the announcement under the cover of a headline ‘Cutting Red Tape for Employers under Single Touch Payroll’,and issued it from his electoral office in the Melbourne suburb of Camberwell, not from the Treasury. The statement said that under Single Touch Payroll, employers’ accounting software would automatically report payroll information to the ATO ‘when employees are paid’.
A leading Sydney accountant, who asked not be identified, told Australian Strategies: “ This has nothing to do with reducing red tape. It increases red tape. What it really is about is introducing by stealth mass surveillance so that the government can get immediate metadata on where every worker in the country is employed at any point in time.”
Because the move requires new software to be written and introduced at the ATO and in employers’ payroll offices, involving a multi-million dollar cost and extensive training. It will not be introduced until July 2016, just ahead of the next Federal election.
As so often is the case, the devil is in the detail of the Government’s new strategy, contained in documents provided in a consultation process conducted by the ATO. Interested parties have been invited to make submissions, but the date for doings (March 6) has already passed. ATO has said all submissions will be treated as confidential.
Apart from the extensive gathering of information about workers’ movements and locations, the new measure will have profound effects on companies’ cash flows, and add to the costs of small businesses. Helping this sector was heavily promoted by by prime minister, Tony Abbott, and the treasurer, Joe Hockey, as the major feature in the May Budget. None of these impacts were mentioned by Frydenberg in the December 28 news release, or in the Budget.
As it stands now, employers deduct income tax, and pay it to the ATO at a later date,usually quarterly. Now this will be done each pay day.They will also have to remit compulsory superannuation deductions to employees super funds each pay day, instead of within 28 days of the end of the quarter. Both these changes will create cash-flow problems for business, especially small business. The IQ group said for many employers ir would have ‘significant impact’ on their cash management’.
Even the smallest business, such as a plumber or shopkeeper, will have to purchase, and use, specialised payroll software.
On the plus side, big employers will require fewer staff to manage payroll, and companies offering electronic payroll services will pick up clients from medium sized businesses. Companies that have deliberately or accidentally avoided their superannuation obligations, especially for those employing short term casuals, will not be able to do so.