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STP DSP Live stream

JOHN SHEPHERD:

Welcome to the single touch payroll session. Before I introduce the panel I would respectfully acknowledge the Traditional Owners and custodians of country throughout Australia with their continuous connection to land, water and community. I would pay respects to their Elders past and present. Single Touch Payroll is an important initial think of using the natural business process to run payroll to meet payroll reporting requirements. This is the benefits of digitisation and an important initiative to drive businesses and improve employees.

We are joined by the leads of three major software providers to discuss STP and the proposed extension to small employers. These people don't need much introduction. I will keep it brief. You will find their full bios in the event stream page. I said three of the largest payroll software providers, not four.

Due to the weather and one of the pitfalls of doing a live stream is weather. You can't account for weather. Deputy Commissioner Deborah Jenkins and Kerry Agiasotis from Sage have been stuck in Sydney due to the weather and send apologies. I hope to catch up with Kerry for a chat and we'll bring that online as well.

Just to the panel for today. Firstly we have Angela Lehmann, Angela is an STP design expert at the ATO and has years of experience in the payroll industry. Sam Allert is the CEO of Reckon and is a passionate advocate of accountancy and is a business manager, Trent Innes is managing director of Xero Software and he has grown Xero teams to better help small business to thrive. Tim Reed has been the CEO of MYOB since 2008, and is passionate about the potential of digital technology to transform society and help business succeed.

I'm excited to have these guys with us. We will shortly go to some questions. Firstly just some housekeeping. We have a lot to cover in today's session, we're expecting a lot of questions. We will do our best to answer these during the session. And if you

STP DSP Live stream

go to our website there is good material there at ATO.gov.au/STP you can find fact sheets for employers, guides for Single Touch Payroll. We will be looking to continue the web cast series in the New Year and continue to bring software providers and tax professionals to join us to answer your questions in these sessions.

A link of this web cast, for those who missed it, will be available from the live stream page in a few days. In terms of the way we will run the session, it will run in two parts, firstly an update on Single Touch Payroll, how it’s going and some of the learning so far.

In the second part we will talk about the announced extension of STP to small employers, things like data security and some other initiatives as well.

To kick things off we have a short interview with ATO Commissioner Chris Jordan being interviewed by Deborah Jenkins on how things are going so far. The Commissioner will be back later to talk about the ATO's approach to the extension to small employers.

(VIDEO PLAYS)

DEB JENKINS:

Thanks for chatting to me about Single Touch Payroll.

CHRIS JORDAN:

My pleasure.

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DEB JENKINS:

We are into Single Touch Payroll, we have 50,000 employers already reporting and 15 of those are small businesses. It's going pretty well. Are you happy with how it's going so far?

CHRIS JORDAN:

I am, because we did expect people to come on board over the course of this year. Frankly that was a good thing because rather than having anyone hit us with all the information from 1 July on we always expected people to take a little bit of time but they have come on board. Even employers who aren't required to be there yet, a number of employers with less than 20 employees have come on board.

So far so good. It's worked. People have realised, it's the solutions that have been provided by the digital service providers, have been very effective. And it hasn't really been a tremendous obligation that some people may have feared.

JOHN SHEPHERD:

To kick things off with the panel today. Tim Reed, you had a quote I saw on Twitter this week from MYOB. It said it's not often I get together with Xero, Sage and Reckon for a chat. Single Touch Payroll is that important.

Why, Tim, do you say STP is that important?

TIM REED:

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It's a great question, John, also a true statement I made, although I do engage with Trent more on Twitter than in person.

The reason I said that is because I believe what we are building is the digital infrastructure for our nation for the 21st Century. All nations need to be globally competitive. It is a global economy that we are a part of. If businesses here aren't able to compete with businesses elsewhere all of us suffer because of that.

Single Touch Payroll is one small part of the digital infrastructure that will help Australian businesses succeed. To me what we are putting in place is one of the cornerstones of the tools that will see Australia to thrive going forward.

We need more entrepreneurs, we need more people taking risks going creating jobs, investing in the local communities, et cetera. If it's hard to run a business then we get less of that.

So our job collectively is to make it easier to run a business, to enable businesses and those business people to be able to be more successful. Time we can save them from administrative tasks, giving them clarity of what jobs have been done, and where they have been done, and frankly I think you used the quote, "part of the natural business process of payroll" which I really liked. It's being able to make compliance a part of that natural business process.

What we enable them to do is spend time putting new products in market, investing in their team members, serving their customers and really doing what they are passionate about and what they love doing.

It only works if we all work together and if we all work with you John.

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JOHN SHEPHERD:

That's a great explanation. Sam, thoughts for you around the importance of STP?

SAM ALLERT:

I really echo Tim's thoughts. We're in a digital age. It's super important for the whole economy, from employers and small businesses to employees, the Government, everyone, I think the fact is as soon as you are submitting a payroll or any compliance process that data should be transmitted to all relevant parties

Once that data is submitted it shouldn't require extra time or paperwork to follow it up, to set a report that is actually telling you something that's happened in the past.

It should be live transmitted to all relevant parties. Then we have more data to do more exciting things. Also as Tim said STP, I think, John, is the first step in the right direction. In fact SuperStream was probably the first step, STP the next step, e-Invoicing may be the next one.

I like to think that Australia is an innovative country, we should be able to move through technical challenges and provide everyone with access to data.

JOHN SHEPHERD:

Trent, your thoughts?

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TRENT INNES:

It's great to be in Canberra. We develop all our payroll here. We have a team and we work with you. The ATO has been fantastic, the engagement, I have enjoyed that. Going third in an answer is hard. I echo what they've been saying. STP is a piece of the digital journey. We're on the journey, back to SuperStream or back to automated bank fees. The access to technology, especially small business, small business has better access to technology than big business. And they have accelerated past big business. We are seeing the digitisation playing out.

This is a step in the process. The overall reaction to STP for those who engaged with it it's been great. The angst around it has been lower than I expected it to be. They are getting on with it.

JOHN SHEPHERD:

Do you guys get together, like in Tim's quote?

TRENT INNES:

We get together on social media.

TIM REED:

On panels like this is the reality.

TRENT INNES:

This is something we all need to get behind. It makes sense to support initiatives like STP.

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JOHN SHEPHERD:

Angela, from your perspective, Sam mentioned the employee benefits, can you draw out a couple of those?

ANGELA LEHMANN:

It's been widely publicised let's protect employee entitlements, the focus is on superannuation guarantee, it extends to STP in other benefits.

Ensuring for example, hopefully they in the future will be able to avoid any tax debts at the end of the year. We can help the employers, "Hey, you forgot your HECS debt. Let's help you get the tax outcome."

That is important. My main message when I'm presenting to employers we understand this doesn't sound like streamlining your obligations, we understand going from a once a year payment summary to potentially every payday weekly, fortnightly or monthly doesn't sound like an efficiency. We are here to waylay that fear. This is the foundation, and we are hoping to streamline the employer obligations coming from payroll even further into the future.

JOHN SHEPHERD:

This is the first step, you being part of the team that worked closely with the guys and other payroll people to make sure the process follows that natural business process, corrections are straightforward. It's a seamless process on top of and at the same time as running the pays.

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That was an easy kick off. It gets harder. We are five months in, you heard the Commissioner and Deb say talking numbers, the ATO is happy with how it's going. Trent, how are things going from your perspective for the substantial employers who have come in?

TRENT INNES:

The feedback has been positive. Our objective with any of this is to make it simple and easy. The feedback we are getting from the customers they say, "Is that it? Is it that easy?" It's a five minute process and they are up and running.

We made a deliberate decision to stagger the onboarding. Any employer with 20 employees and above is being prompted to join but not mandated to until the end of this year. Any employer with less than 20 employees if they want to go on STP can choose to do that.

The reason we did that is a couple of things. We pay over one million employees every month. We wanted to make sure it was staggered. From a support perspective, even I suppose from an ATO perspective to make sure you can handle that volume as well.

JOHN SHEPHERD:

That is great, how about you Sam?

SAM ALLERT:

It's gone well. To Trent's point. It's been about education. We are here now, right in the middle. What are we, five months into STP for 20 employees and plus. We have got the big change coming next year for smaller business.

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We have found it's gone brilliantly. We did have the ability to delay rollouts or provide extensions. We really didn't need to utilise any of the extensions.

The other thing we focused on is making it as simple as possible for our clients. We have got multiple products in market like all of us. The reality is we decided to make STP compliance for all the products, whether they are desktop, Cloud, hosted product.

I think that might be simple. I wanted to pick up on Angela's point this STP is really removing red tape. It might be something that you reported annually. That was paperwork, another process. What we have done, our roles and other software providers, our roles is to comply with government regulations, comply with government technologies, then means that as soon as you hit submit or pay in your software that it's transmitting that data. Almost nothing else to do for the employer. I think because of technology we have really streamlined that process for employers.

I want everyone to understand that. Back to how it's gone. I was getting numbers yesterday from the team. We have well over 5,000 businesses using Reckon products and lodging STP. Something like 60,000 transmissions. I asked for an error rate, it was below .5 error rate.

We have been providing tax software we can all agree we're in the high 90s. .5%, a very low rate in such a high volume of transmissions.

JOHN SHEPHERD:

That is great. Sounds good. Tim, MYOB's journey here?

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TIM REED:

A similar one, we have a wider range of clients' using our software. We started early with the big employers, we put our own pay run through in January. We started six months early in getting large employers. Some of them have 5, 10,000 employees. For them getting up, making sure we had a program to make sure they were on board and compliant early was important.

Rolling through the range of payroll software. We now have over 20,000 employees who were submitting through STP. Over 650,000 lodgements. I'm glad Sam, we're at .1% error rate. It's been very smooth. We tried to architect it to be smooth. To submit it to the ATO. If there is anything upstream that's not working we protect the clients from it. That's been important.

The client experience has been smooth. On average it's taken about one phone call per client to get up and running. When you consider some of those clients have 5 or 10,000 employees, it's been a very smooth process for them.

I would say, I think if there is an area for us to concentrate jointly on improving, by jointly I mean your team and our team, John, is on the onboarding. Once people are on it runs very, very seamlessly.

JOHN SHEPHERD:

That's great feedback. I will go to Ange from an onboarding perspective. What issues have we seen in terms of teething issues and the early data coming through?

ANGELA LEHMANN:

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We feel the same way as has been explained already. Overall our processing times have been really good and we are happy with that. Some of the initial teething or onboarding issues are things that are more to do with that connectivity with the ATO. A lot of payroll transactions in the past haven't required that direct connectivity.

Things like security and authenticating to the ATO who the sender is, you might have heard us publish things around software ID numbers things like that. Things they wouldn't ordinarily would have had to think about because they haven't done this directly to the ATO before.

Just getting that education out there as to what it is you need to do to finalise the setup. The software you have done a great job in making the onboarding easy for the employers. There is usually that one final step they have to make to get it across the line to us.

Definitely that. From the early data we are learning a lot. We are seeing a lot. I guess what is really important we understand it is a transition year, that everyone is coming on board very gradually. There are learnings for employers as they are coming through and likely - conversely to that we are learning a lot from the data. It's a real watch and support approach we are taking, seeing that data - odd exceptions that we see, speaking to the employers working with the employers to ensuring we are all on the learning journey together and not relying on the data too heavy in the first year as we transition to STP.

JOHN SHEPHERD:

No big analytics engines straight away?

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ANGELA LEHMANN:

No analytics engines, high level analytics to point us in the right direction. Any employers having problems with data we can reach out and work with them to get it right. Definitely no major compliance work, no big stick, as I think I have heard the Commissioner say before. We are working with employers to get them in to make them comfortable.

JOHN SHEPHERD:

A couple of things, I was at a session, I had a couple of employers saying, "I send my files. I haven't heard from the ATO. Should I be worried?" You shouldn't be worried. We are not doing a lot of contact.

ANGELA LEHMANN:

We are watching the data. What we are learning a lot of the time something that looks odd in the first instance gets corrected. They are using the flexible frameworks designed and picking up in the next pay run and the adjustments are coming through. It is a learning curve knowing when to reach out and not to. Letting that data take its natural course. It tends to self-rectify over time.

TIM REED:

Can I pick up on that, to trusted advisors and small business. One thing that is genius in the design of STP that isn't appreciated by business owners. If something goes wrong it's a self-correcting system. Because we are reporting year to date figures, if there is an error in the pay run if it's corrected in the next pay run that is self-corrected through STP.

JOHN SHEPHERD:

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I have heard no errors happen in pay runs?

TIM REED:

Mistakes do happen despite the best attempts of those doing the pay run. That's when we get people calling into the centre, people are panicked. They feel the ATO are waiting to catch them.

They don't know what happens to the correction. One message that I would really encourage people to share with other small business owners this is a self-correcting system and a system you go forward and make the corrections in your payroll and everything will flow through to the ATO. That puts a lot of people at ease.

JOHN SHEPHERD:

That is an important point. We have had a lot of feedback about the need to do that. I joked about no errors in payroll. I definitely don't think payroll teams make errors they are particular people. I have learned over that time they get information late. They get fed through wrong hours.

Stuff comes to them they process it it's a moving feast. You move to the ATO through STP it's moved on. The next time we see the data a bunch of stuff has happened and it's fed through.

TIM REED:

The system works.

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TRENT INNES:

It's education, we have run thousands of webinars, people have attended them. They are dying down, people want to understand what is going on. Once you get the education - it's an education process.

JOHN SHEPHERD:

I would encourage and remind people to put questions in online. A couple of questions have come through. If you would like to ask questions of any panel members, if there are particular panel members you want to pin down put their name down. We will keep going.

I was going to ask each of you again, anything that surprised you in the implementation so far, we have talked about some of the learnings, any surprises?

SAM ALLERT:

I would jump in, the importance of education, I wouldn't say that's a surprise, small business owners are so busy. I was reading an article from Westpac and Deloitte joint research. The research showed that average small businesses are spending 12 hours a week on paperwork for government regulation and red tape. Eight hours a week chasing invoices I'm. Staggered by the numbers. That's 20 hours a week doing noncore business. To Tim's earlier point we want to be an innovative country to allow small businesses to do what they do, thrive and get into the zone.

On that education is the key, they're time poor, as Trent said we ran a number of webinars the most attended webinars we have run. Thousands dialling in for an STP webinar, many conferences. I credit your team John and the ATO you have personally been at a lot of the Reckon conferences.

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Even with that what was a surprise going to a conference asking for a show of hands who is aware of STP, seeing a low percentage of small businesses be aware of it. That was always a surprise. The solution is ongoing relentless education in a simple way.

JOHN SHEPHERD:

Trent, did you have thoughts?

TRENT INNES:

Three things were surprising, those who were going through the process found it to be simple. They decided to do it then away they go. The same as what you said Sam. When you look at a small business a number of them are not using payroll software surprised me. The number of people who are faxing it into the ATO. I can't remember the last time I sent a fax, it was at least 10 years ago.

TIM REED:

Come on Trent, you were on it last week.

TRENT INNES:

We don't even have phones in the office, I don't know where I would find a fax machine. I was surprised by that. The last one is how many small businesses are not aware of STP. Given there is a lot of noise about it, I was at a small business event I asked that question.

The same reaction. Close to half the room and put up their hand and said, "We don't know what STP is." There's a lot of education, a lot can be done through trusted

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advisors and bookkeepers, there are small businesses out there who don't understand or know what it is.

JOHN SHEPHERD:

We will talk about the small employers later, Angela, this is not a surprise, the approach has been low key?

ANGELA LEHMANN:

It is low key, we had the stats up front. We knew how many employers weren't digitally enabled using spreadsheets and other means to calculate the payroll. We knew it had to be a consultative approach to manage that section of employer.

It wasn't too much of a surprise for us. We've had a lot of learnings as we have covered earlier. We have learnt there is a lot more education to be done. We are working hard to ensure the web content and getting out to the industry event and working with partners such as yourselves getting that education out there is really critical at this point. Definitely not a surprise. We recognise there is a gap in education.

JOHN SHEPHERD:

There was a question that came through online from Sam. Sam picked up on something you said why STP is important. He asked how is STP going to protect employee entitlements?

ANGELA LEHMANN:

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OK. (Laughs) That's a good question Sam. As I said, we're not using the data for a lot of compliance work as well. The aim is of course that over time with that real-time transparency it's a number of ways, the first time the ATO will see superannuation guarantee being reported by their employers, so whatever that liability is for the employee we see that in the pay event report. That's the first time the ATO has that oversight into that information.

Previously we saw a member contribution statement from a fund once a year, usually in October. It was too late to act on any nonpayment or under payment that we suspected.

We will see that, there transparency there, and transparency back to the employees, the employees will see everything recorded for them on the STP online at myGov the ATO online account.

We believe that transparency will lead to greater compliance, we can step in, sometimes it's unintentional. Sometimes employers struggle with the legislation in understanding the obligation. We can step in saying, "Do you realise you may not have met the obligation here?" To protect entitlements for employees.

JOHN SHEPHERD:

A question to the panel, there are a couple of questions coming in online about the role of agents. How do you guys interact online with the STP with the agent client, how do agents support clients with STP reporting?

TIM REED:

Agents are often the most trusted advisors, explain what STP is there. There is an important role. No matter what you do, the webinars, the content you put up on the

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website, John. Small business owners, owners in general, a lot is in the medium-sized businesses 20 employers. They like to understand the impact.

They like to have somebody who understands the business and the context of the business knows the journey and the seasonal fluctuations of the number of employers whatever it might be who can interpret what is required for them for the business.

That's the first thing I would say the agent plays a really important role in making sure that the business owner, the bookkeeper whoever it is responsible for making the pay runs understands the concept of STP and what is happening.

All of the information that is from STP then gets captured in the BAS on a quarterly basis, the W1 and W2 fields in the BAS capture the information reported in STP. At that point in time often the agent will be involved on a quarterly basis with the business owner making sure the BAS is compliant.

It is important for agents to know that the payroll system is the system of record, even before we get to the pre-fill where the ATO can pre-fill the BAS form there may be things that happened in the software that haven't been lodged. At that point in time the agent will be important to help the business owner understand how to process in those certain circumstances.

I would say the bigger and more important one is stepping back and being that advisor to the business owner. That is great, Tim. Trent do you want to make a comment?

TRENT INNES:

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They play a super important role. You can scale it out to small business. That's who they go to for advice. If they don't understand or are confused they are more likely to reach out to the accountant or bookkeeper even the software provider or the ATO. That's where they will go to for advice. It's important they are educated and up-to-date. They can provide the right advice at the right time.

JOHN SHEPHERD:

Lastly in this session, keep sending in the questions we are getting good questions. Ange we have been asked Tim talked about how easy the errors are to correct in the system. Someone asked if you could elaborate on how corrections work?

ANGELA LEHMANN:

We consulted a lot when we designed Single Touch Payroll. A lot of the people in the room, as we have mentioned, are developers and payroll experts and agents, registered agents that worked alongside us that feel the fine points of the employers, payroll is fluid, payroll changes, we can't have employers having to go back and re-report something they have already reported.

That does not align with the natural business process of running a payroll we discussed earlier was the main focus. Let's keep it in line with the way payroll is run now. The flexibility of the corrections framework which we keep referring to it as, if you detect an error or omission or new information that comes to light after you have submitted the STP pay event you have the ability to run that through the payroll and ensure that when you lodge the next regular pay event the information has been updated.

Because the employee information is reported at a year-to-date level. It gives us flexibility to enable that correction. That's why we will see it over time, we will see it will change, we will see the correction come through. We don't ever want to say to

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an employer go back three pays or 10 pays ago and resubmit something you now have new information come to light. We always want to make it forward.

JOHN SHEPHERD:

Hopefully that's cleared up that question. I will move to the second part of the session, keep posting the questions. The second part is around the extension or proposed extension of STP to small employers. It's important to note that the legislation to mandate that is still before Parliament. There is an announce date of 1 July. I will go back to the video with the Commissioner talking to Deb Jenkins. He will talk about the ATO's approach to that extension then back to the panel.

(VIDEO PLAYS)

DEB JENKINS:

We've had people raise concerns for us about the start date for Single Touch Payroll. People may not be ready. They are worried about what it means for them. What is going to be your approach, what messages do you really want the community to take on board when thing about Single Touch Payroll, it's going to be something they need to comply with?

CHRIS JORDAN:

Just like this remember, it is a year of transition, next year will be a year of transition, and in 2019 might not - 1 July 2019 is not that far away. We know it's been coming for a long time. People tend to put it off until they are up against the crunch of doing something.

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Please people do not panic. Do not be concerned. We will take a very reasonable approach to this. We expect people to take a while to come on. As I said, though, this year has been surprisingly positive. And I always remember a commentator until one of the round tables we had with external associations and some government ministers, a year or so ago, someone said, "Look, we're Australians. Others have done this around the world, so surely we can as well." So we will take a very reasonable approach in the first period, like the first year is a transitional year.

After that if you've got problems we are very open to grant deferrals. We are very open to grant class exemptions, for example for those people who might not have an effective internet connection or we can provide an exemption until that happens.

I'm firmly of the view that solutions will come into the market, low cost solutions. We are a capable bunch of people in Australia, and we will certainly take a reasonable approach. Because what I want to see is the long-term benefits of Single Touch Payroll. We're not interested in jumping out there in the first year or so, waving our finger at people saying, "You haven't done this quick enough." It's what will be the benefit of this for our community for the citizens of Australia, over the long-term. That's what we are really need to be focused on.

DEB JENKINS:

That is great news. That will be a real relief to those people who are worried. They are genuinely worried about it.

You sort of touched briefly on things that might be available. One thing people say to me, "Deb, do I have to go and buy payroll software?" I know we've been having a chat about this. The short answer for everyone is no, you don't need to go out there and buy payroll software. What other options have people been talking about out there?

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CHRIS JORDAN:

We're not going to force people to put in a business, accounting system and payroll software. A lot of people will have basic accounting software but not the component that does the payroll. Some of the software providers might be looking at that as an opportunity to get people in to maybe a more upgraded sort of accounting system. With some of these low cost payroll solutions added on they have to realise everyone is going digital, with e-Invoicing, the way people order and dispatch.

DEB JENKINS:

It's just the way it happens?

CHRIS JORDAN:

It is the way it happens. We're not forcing people to go digital to get the accounting software and payroll. It is what is happening. There will be low cost solutions, simple APS that people will be able to use.

Internet banking all of those things will be available. For micro employers we're not going to force you to buy that software. That's for people with four or less employees.

They can actually for the first couple of years do the STP requirements quarterly.

DEB JENKINS:

Exactly.

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CHRIS JORDAN:

Using their registered tax agent when they do their BAS. So there are people out there that you can use that already do some jobs for you to meet your compliance.

There will be a whole array of opportunities that either aren't yet in the market or have already flagged like that quarterly BAS-type approach.

DEB JENKINS:

What I'm hearing there you get it, I get it. Not everyone is going to be able to be STP enabled on day one. You are taking a practical approach, we are being reasonable with a range of solutions coming into the marketplace. STP is going to be really good for everybody.

CHRIS JORDAN:

That is precisely right. There will be the solutions we will take a reasonable approach. We are interested in the long-term benefit. There is nothing for us to gain to go out there really quickly and wave the finger at people, sort of going to force people to do things that aren't really happening in a natural easy way.

Let's make sure we get it in, let's make sure that over the long-term the system is fully in place hopefully for all employers event eventually. We can take the benefit that other countries have use using Single Touch Payroll.

JOHN SHEPHERD:

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Good context there from the Commissioner and Deb about some of the thinking about that implementation. I will reiterate that we don't have legislation in place. Small employers can choose to start report when they are ready. We have certainly seen that so far some of the early lodgements we've had on STP we've had around 15,000 employers with 19 or fewer employees who have started reporting and found that experience pretty good.

More context on the numbers as well, we have a pretty good handle on how people have lodged their annual payment summary data to us in the past. We estimated 730,000 employers with 19 or fewer employees 19 and 50,000 have one to four. They are micros. The data shows one-third of those use a connected payroll software product. Two-thirds don't. That's a pretty big population who don't currently use a payroll product.

I was going to ask the panel about what they see on that front. Trent you're big on numbers and stats. I saw an article quoting research as well. This morning in the paper. Do you have any comments around those figures, what the challenge is?

TRENT INNES:

It blew me away the amount of small businesses out there still faxing information in or use spreadsheets doing it by pen and paper. There's a lot of complexity in payroll. Some of you want to get right. One thing in business you don't want to do is not pay the people properly.

I was amazed by those numbers. I think going back to what the Commissioner was saying we are on a digital journey. This is another step in that journey. I would hate to get to a point we end up with a digital world and an analogue world operating at the same time. We need to find a solution. We all agree we see the benefits.

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I maintain we are going from something nice to have, to a have to have. It's going to happen. It's about when. The key is making sure there is the right solution in market for those businesses out. There they can take advantage of this to make it easier for them.

The thing that is probably holding them back potentially a bit of fear and the unknown. We want to try to make it easy for them to get on with doing what they love. There aren't many business who go in there to do accounting or payroll. We have to help them.

JOHN SHEPHERD:

They don't have payroll teams.

TRENT INNES:

We want to make it easy?

JOHN SHEPHERD:

Sam, your thoughts?

SAM ALLERT:

I want to join the dots, the tax advisors and bookkeepers what an opportunity. If there are so many hundreds of thousands of small businesses not using software forget about the compliance requirement would streamline their business. If someone is faxing information they're the people spending 12 hours a week on regulatory processes in my opinion. The reality is on any one of the payroll software

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the set the payroll software up you hit 'run' then we work on the rest working with the Government to transmit the data.

The bookkeepers and tax agents have an important role to play in educating and helping small business get set up for this. The other bit I will pick up mentioned in the video, I think there is a fallacy about expensive software, and affordability for small businesses.

We all know various pricing structures, as an exam many Reckon One is under $10 a month unlimited employers Single Touch Payroll compliant. $10 a month the reality is that is less than three coffees or a pint of beer in a certain pub you could go into nowadays.

I think there is some fearmongering going on. That fearmongering to Trent's point I love we're in a digital age. This is the right step. Another step forward. I would hate to see fearmongering and protecting analogue or manual processes slow down the whole economy getting benefits from being in a digital age and moving forward.

JOHN SHEPHERD:

I was going to say I'll ask you later when you get that $10 pint.

TRENT INNES:

Sam drinks good beer and bad coffee.

TRENT INNES:

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The cost of it, what is the cost of not doing it. The amount of time people spend doing manual processes astounds me.

JOHN SHEPHERD:

Tim?

TIM REED:

To avoid repeating everything that Trent and Sam said, I think the Commissioner put it clearly. This is where the world is going. It is the way that business is going to be done much as a nation what we can't do is hold ourselves back, because there is a change process that some businesses need to go through, or there are new things we have to be training people on educating on, et cetera. What he said was we will aim for a date then allow for the fact that different businesses might have to my great at a different rate from there forward.

If we don't set that date ultimately we're not going to achieve the transformation that we want to. If I go right back to what I think we are trying to do in building a competitive nation, to put in the infrastructure for Australian businesses to compete on the global scale this is important work.

I thought he said it eloquently, the perspective that the ATO is taking is absolutely the right one. This is going to happen. We are going to move and all businesses will be reporting information in this way. Let's make sure we're aware of the fact that people are starting from different points and might have to move there over a certain period of time.

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We're not coming out with the big stick on day one. Let's not lose sight of the fact there are benefits for employers, benefits for employees and benefits for the system.

It remind me of the first client I went to speak to after SuperStream was put in place. There was years of angst about that, right through the community. She said Tim last quarter it took me four minutes to do super, this quarter it took me four minutes. You multiply that across the economy that's what we are aiming for. It only works like SuperStream if we say we are all in and the whole system has to be in.

JOHN SHEPHERD:

I will come back to Angela about the ATO approach. We were talking there cost came up as a barrier for people. The panel's thoughts around other barriers, how we might tackle them. What are the barriers to this group that is not using software or not digital at the moment?

TRENT INNES:

Actually the biggest one is the fear of the unknown. That's an education process. We touch on education a bit. That is education, education. The fact that so many small businesses don't know what STP is. If they hear about something they don't fully understand it that leads to fear.

Our job is to educate them. The accountants and bookkeepers are the best to get it out. And strong messages that can go from the ATO around that to take the fear and uncertainty out of it. To really clearly articulate what the benefits are.

If we get it right you will see adoption pick up.

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JOHN SHEPHERD:

Certainly one of the things we saw in the pilot we did last year. One of the findings people are prepared to keep doing what they are doing they don't have the time or feel they have the time to make the change. Even if the thing they are changing to will take them less. Sam, do you want to comment on it?

SAM ALLERT:

I support Trent's comments. We are repeating ourselves. Education, we play an important role from the webinars, the training working with the advisor community. The thing that is important for us as advisors and companies to provide is simplicity.

We have to educate the why and the how then make it super easy to turn these features and functionality on, make it a standard part of an upgrade, a rollout, whatever it is. I think simplicity is important. Education comes in simplicity, because it's about training the business owner to go, "You have got the right software all you need to do is press these buttons, follow this process." I might make it simple but it is important.

I reckon all the call centres experienced high volume at the launch of STP. We did. Most of the calls and analysing them were help calls or process calls rather than software or ATO issues. It was all about, "how do I?" That's important for us to be geared up.

JOHN SHEPHERD:

We had a few actually that said, "Did you get it? It seemed too easy, did you get it?"

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TIM REED:

How do you know it's been lodged, we went back and lifted the prominence in the software. Without repeating everything, the other thing the Commissioner said John, I encourage you and all the colleagues to reinforce. It's not just the education on the change, the education on the why and so on.

People do have a fear of submitting the wrong information to the ATO. All of a sudden that just lifts up, the thought of, "Wait a minute, if I get it wrong now it's going to be really really bad, not just bad." I think there is that extra fear in this particular case when other digital processes. If it was e-Invoicing going between two businesses there would be education that is needed on the new process and the why and so on.

This does have a little element of extra fear in it, saying the right things and approaching it the right way. It's how do we continue to amplify that message.

JOHN SHEPHERD:

Let's amplify it again, Ange, the approach for the first year for penalties?

ANGELA LEHMANN:

We are watching the data, learning from the data and helping employers to get it right. We want to make the experience a smooth one and a positive one. It's not about compliance this year, it's transition. It's working together with those employers and their product to ensure that they get it right. They are comfortable with what they are sending and understand what they need to do. So yep...

JOHN SHEPHERD:

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Any penalties?

ANGELA LEHMANN:

The legislation has a relief period which means in that first year of reporting we are not going to be issuing penalties unless the Commissioner has given you a warning letter. That we only see to be in extreme cases of nonreporting or something like that.

JOHN SHEPHERD:

Clear message transition year, there would be a transition year for small employers.

ANGELA LEHMANN:

Let's get it right together.

JOHN SHEPHERD:

Don't fear sending the data in, careful approach.

ANGELA LEHMANN:

Another important message it is a Tax Office initiative in the sense we are rolling this out. Remember that payroll is not all about your obligations to the Tax Office. You have obligations, compliance obligations to Fair Work and in other industrial relations matters as well.

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So if we are talking about this journey, the journey is not just get it right for STP your compliance obligations stem much broader than just STP. So it's a good way to ensure give the directors of those businesses a bit of comfort they have the right procedures in place.

JOHN SHEPHERD:

Going back, I said I would come back to you on the Commissioner video stuff. The Commissioner talked about a flexible approach in his video. He said he wouldn't force small employers to purchase payroll software to report under STP. How do we plan to achieve this, the question I hear a bit is the ATO building a reporting portal?

ANGELA LEHMANN:

I first might address that no portals from the ATO, we are not making that available.

JOHN SHEPHERD:

Cheering?

SAM ALLERT:

Everyone out there is cheering on that, Ange.

JOHN SHEPHERD:

Touch on that. Why are we not creating a reporting portal?

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ANGELA LEHMANN:

We're not in the business of creating portals. We have partners for that. Thank you, partners. We are focusing on compliance getting everyone in. We're not in this system for lodging.

There are other things such as security which I know we haven't talked a lot about. There is a lot these partners go through to ensure the products have all the right security and everything. We don't want to get outside of the main focus getting the reports in and the compliance.

To the point around what the Commissioner was talking about and the nonpayroll software approach is, we have done so much consultation and spoken to small businesses trusted advisors, the practitioner segment, also with a lot of industry associations that do work closely with small business.

What we have understood well, "If it's just me and I employ one other person or two other people surely I don't have to buy a full payroll suite to submit an STP report?" It makes sense. It is practical. We came up with an expression of interest to the industry, we said can you help fill this market fill this gap for those employers where it doesn't make sense and it's not practical they need a full payroll suite of software to meet obligations.

We have been pleasantly surprised with the feedback we have gotten and the providers who have come to the table saying, "We can help fill that gap. It will be $10 or less, potentially no cost at all per month to actually help the smaller businesses to meet their obligations." It may not be software, it could be an App or another device. We are trying to help them as make it as simple to Tim's point before as simple as possible they don't have to stress and there isn't much of a transition to STP.

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JOHN SHEPHERD:

To add to that quickly, there is a question online you can answer quickly. We keep hearing that low cost solutions will be available. Where can we find information, when with can we find information on these?

ANGELA LEHMANN:

A timely question. We're in the process of publishing the providers who are going to provide a product in that market. We should have that list up in the next couple of days. We are publishing that on the ATO website. At this stage it will be a name of those providers, over time as we work with those providers, we will actually be publishing more details around the actual products. Who you should be contacting if you want to talk to those providers, and start that process.

The first will go up in the next couple of days.

TIM REED:

Can I add something in that perspective? We will be one - we've responded to the expression of interest. We need to make sure the legislation get passed. No software provider will invest on something spending on our part we are ready to go on 1 July. We won't be actively going out taking something to market before the legislation is passed. That's the other side of it.

Practically we face the same commercial realities. Getting ahead of it there is no point if the legislation doesn't get through the Parliament.

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That will be a tipping point. Everyone in the industry will hear a lot more from the providers once the legislation is passed hopefully that's in the next week or two.

JOHN SHEPHERD:

There is a question online about when the legislation will pass. Not something we can control.

TIM REED:

It's crazy here in Parliament. If I go back to something the Commissioner said. Correct me if you want to John or Ange. What I heard him say those who are micro businesses who are really unable to file in any other way, having the tax agent file on a quarterly basis when the BAS is filed will be an acceptable outcome.

Everything else comes down, as I heard that one final output. If there is nothing else that that small business owner can't get their mind around presumably they use a tax agent to lodge the BAS. In that instance there will be the ability for that people to commit at that point in time. That is a huge catch-all.

JOHN SHEPHERD:

Importantly that is a two-year transition period. We acknowledge that, as Ange mentioned the consultation, we have done lots of feedback. People will struggle, very paper based and reliant on that trusted advisor, doing it at the same time you see the advisor for a BAS is a runway in for somebody who has a long way to move.

Trent did you want to make a comment around the EOI or the cost?

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TRENT INNES:

We have responded to the EOI, I agree with Tim there is a commercial reality we need to bait until the legislation is passed. Two questions I'm being asked, what is happening in the under 19 category, I know as much as you know. They are asking that all the time.

That is holding them back as well. They don't want to run two processes either. They don't want to be running some that are doing STP some that are not. The other one is can we remove the friction out of the process setting up the STP having to contact the ATO. Can we service that through an API or make it easier so the small business can sign up seamlessly. They're the two big things that are coming up.

JOHN SHEPHERD:

Sam, any comments?

SAM ALLERT:

Reiterating we have responded to it. We'll be providing an entry level solution for businesses with employees of one to four. Not a lot more to add there.

JOHN SHEPHERD:

That is great. I think we might move the conversation. There is a question here in around fraud. I was going to raise and Ange touched on the importance of that. Question is how do the three leading payroll service providers in the panel see their role in collaborating with the ATO to prevent individual fraud hitting the financial industry, and pick up on security as well?

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TIM REED:

I'm happy to kick off. The ATO have realised that we're all now part of an ecosystem where weaknesses exist in the ecosystem then the ecosystem is weak. The ATO has required us to being ISO compliant everyone who connects to the ATO system. The assumption everyone is on that same time frame. The ATO are not looking at the system but the ecosystem and requiring all partners who connect through the APIs to comply.

As a part of that two-factor authentication is compulsory and being rolled out. We have rolled it out across all the client base. We have a genuine two factor authentication. There is a separate authenticator App you have to use. Every 30 days, every device has to be authenticated. We have gone right to the extreme. We have gone past what was your mother's maiden name, so on just jumped to the pure authenticator solution.

Because actually that ecosystem all of us who tap into and are part of that system we have to be responsible for the security of the whole, not just of ourselves. I think the ATO have done the right thing there, requiring partners to make sure they are at a standard where they are comfortable, that the security we are running, I think of this as national infrastructure we are responsible for it is secure for everyone.

SAM ALLERT:

As national infrastructure, the operational framework that you provided that we contributed to in the early days it's very strong, very robust. It's been great working with the team to roll that out in the interests of the whole economy and as Tim said the whole ecosystem to make it secure. It's a critical thing we all deal with in today's technical society is digital security and data protection.

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And working in collaboration with not only the other providers on the panel but the ATO with your operational framework and to Tim's point about ISO compliance, it's ISO compliant. We all have to be compliant.

TRENT INNES:

Security is important, we have rolled out two-step authentication to every user, everyone is man dated to use it, with an authentication App and ISO compliant something you have taken extremely seriously as you have to.

JOHN SHEPHERD:

We have covered that well. I might go to the broader thing. We have touched a few times today on the broader initiatives, STP is about reporting to government and things that come out of that.

What is the bigger picture? We touched on SuperStream, I have heard e-invoicing mentioned. What are the considerations that people should be thinking about, what we should all be thinking about where digital is going?

TRENT INNES:

I will take it first. If you look at business they are further down the digital journey than they realise. If you look at a small business, every small business has a connection to the bank, they have connection to government, to suppliers and connection to customers. So many of those are digital connections.

What we are doing we are almost in a digital tsunami coming through. We have got where we are right now we are talking about STP, but then we are talking about e-invoicing with open banking and open data. This isn't just a trend in Australia but

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around the world, UK making tax digital. I was in Asia having almost identical conversations up there. They are heading down that path.

To be part of the global economy. The world is a small place we have to be digital ready. We are well and truly on the track and I think we are further down the track than people sometimes realise.

JOHN SHEPHERD:

Any other thoughts there?

SAM ALLERT:

Broader initiatives. I think everyone benefits from less paperwork, less compliance or manual processes, advisors working with their small business clients to actually educate them and provide that kind of advice then John, I really - yeah, I echo Trent's point, I don't have too much more to add.

JOHN SHEPHERD:

That is great. A few more specific questions that have come in online, I thought I might cover a couple. The Commissioner discusses exemptions, specific question about people with regional areas people on farms things that don't actually have any internet or have limited internet. Ange what is the approach there?

ANGELA LEHMANN:

We have really tried to think really carefully about how that impacts employers so we have some guidance online at the moment which we have had it online for a

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while. We have actually made the sort of exemptions available to the substantial employers who start obviously during the course of the year.

If you have internet issues and or no connection we are working with to see whether one recurring deferral which is what we call when we can give you three additional days to lodge that STP report. Instead of it being due on the pay date they get an additional three business days to lodge it.

Alternatively if that doesn't work we would exempt that employer from reporting under STP. They revert to the payment summary and annual report process.

JOHN SHEPHERD:

There are a couple of examples around farmers with casual workers, shearers that would apply.

ANGELA LEHMANN:

To the situation, yeah.

JOHN SHEPHERD:

In those circumstances.

SAM ALLERT:

Can I add to that, everyone talks about cloud we are investing heavily in the Cloud. There is a massive move to the cloud for small businesses a lot of benefit. We have

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a huge prosperous regional and rural area and businesses in Australia. MYOB and Reckon our heritage is desktop software as we migrate to the cloud. Our approach is to make it simple for all users whether they are on a desktop or cloud product we are made them STP compliant. They can be in a regional area with poor internet connection. They don't have to go to one of our cloud packages just to be STP compliant.

JOHN SHEPHERD:

That is great. Coming back to some of the barriers to small employers to change. We talked a little bit about the agent option. How do we educate 700,000 small employers about what they need to do in STP? I know we'll have some information awareness going out. Webcasts, other things. Thoughts about the best way to get that support to all those small employers?

TIM REED:

I don't think there is any one single way. There are things we have spoken about. The trusted advisors are the best ways to get to small business. Accountants and bookkeepers are absolutely critical here in getting the message out to small businesses. We all have a role to play and all spoken about the webinars and communications we have put out directly to our clients'.

Nothing gets an open rate more than something that has a headline from the ATO, John. There is a message there as well. Owners respond when they think it's compliance. That lifts their importance in their own mind. I think it's all of us working together through that.

Again the Commissioner spoke about the fact there is going to be a go live date. We are thinking it's 12 months of transition. So what that enables us to do is to put mass messages out to market to get as many as we can, then be able to follow up with

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those that clearly haven't heard the message and aren't making the change, such that we can follow up in a more targeted way with those groups.

SAM ALLERT:

All I would request from everyone, everyone who plays a role in here, other government organisations bodies, small business councils, et cetera, stop the fearmongering, this is an exciting time. This is exciting progress. We live in an innovative nation. We should get behind some of this progress. This is a one small step to getting a digital economy then everyone benefits.

Most of us are salary and wage earners. For that information to be transmitted to all relevant parties as soon as we are getting paid. One we get protection, all employees no 7-Eleven examples where people are getting under award pays, a simple formula for the ATO to pick up protecting employees, all that data is accessible to relevant parties to provide additional services to value-add for the whole economy.

Stop the fearmongering about how scary it is or how much of an impact it will have a small businesses, there are already so many options. As Tim said the last option or could be the last option keep working with your trusted advisor and quarterly submit this information.

TIM REED:

Can I pick up on the fearmongering, I do get a little bit passionate about this. There are people out there who say they represent small businesses let's be honest all of us work with small businesses, it's a big small claim to say, "I represent the voice of small business" I have heard people say that. I have heard them say 100,000 of businesses will struggle with STP which is 5% of businesses.

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The ATO started on STP years ahead of Inland Revenue in New Zealand. By the time it gets rolled out to businesses here we will be years behind New Zealand. There is a good reason why New Zealand are ranked the number place in the world to do business, Australia is ranked 21, four places above Kazakhstan. That's where we are. We love to complicate things, find exemptions and exceptions.

We did work a few years ago, it cost Australian small businesses 14 billion a year, that number is three or four years old to comply with get more than it costs the same businesses in New Zealand. It has to do with the complexity in the way in which GST was introduced covers 46% of the economy versus 98% and the reporting compliance with the G-codes that had to be captured at a line item detail on each invoice.

What we allow people who report they're in it for small business to get out there and pick a small slice, call it 5%, drive that fear into this 5%. That becomes a political movement. The politicians then feel like they can't push forward with something, and what we will end up with is a half-baked system. Like a two tier company tax system. There is not a single economist who thinks that is an efficient way to have a tax system structured in a nation. We talk ourselves into it.

Sam is 100% right it's the fearmongering that gets us there. Let's not allow STP to end up in that place. That's where I go back to how pleased to hear the Commissioner say it will happen here. We understand there are different journeys for different businesses. We understand if the long run a business does haven't connectivity we have to allow them to adhere to the current process.

Let's deal with the exemptions rather than create an upfront fragmentation.

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JOHN SHEPHERD:

Thanks for that. You make a point around adhering to the current process, if you are exempt with STP continue to do, provide payment summaries.

A might change the pace to go back to the detailed questions there are a few detailed questions coming in online. Ange for you, what stage will the STP upload the annual pay as you go summaries for pre-fill for 1 July 19? When will the data become available in other words for the tax return process?

ANGELA LEHMANN:

Thank you. I will say when we move into the STP world we refer to them as income payments. When income statements, when you are on ATO online it's an income statement. The employee can view that any time, they will see a year to date balance on what an employer is reporting.

It won't be pushed into the pre-fill for the tax return until after the employer has finalise finalised the STP data. That finalisation is due on 14 July the existing payment summary obligation due date. Once your employer has finalised your data that's the prompt for our systems to push it through to pre-fill. That will be either to the MyTax system online, if you use an agent they will get the pre-fill report.

That trigger is the finalisation from your employer.

JOHN SHEPHERD:

That's right. People won't ask their employers for group certificates or payment summaries next year?

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ANGELA LEHMANN:

It is important to note if your employer has reported for you under STP and final finalised your report in STP they don't have the obligation to. Some employers are saying they might issue them for the first year to help employees to transition. You can log on to myGov or ATO online to download the report.

At any time of the year if you want to down road the year-to-date balances to speak about a home loan or contact us, contact the ATO to make sure you get a copy of the statement.

JOHN SHEPHERD:

Interesting from the panel thoughts about the individual removal of payment summaries from the system. Have you guys thought about how you will handle that in the systems for next year or will people get it and not coming looking?

TRENT INNES:

We are working through the year-to-date processes we will be releasing it shortly. We make it as stream lined and easy as possible.

JOHN SHEPHERD:

Any thoughts, Sam on that one?

SAM ALLERT:

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Absolutely, we will make it a standard part of the STP process. And as Angela said that hitting that final submit then the data is there. All that final submit is confirming the employer has given all the relevant information all the relevant salary and taxation. Now it can be used for other services or benefits like pre-fill.

TIM REED:

Obviously we have to keep that capability in the software. Not everyone is moving at the same date to the exemptions we have spoken of. It's not as though we can go through and disable that capability and I don't think anyone would be thinking that is a viable approach it is a stressful time for employers something in the order of 40% told us they would be working past midnight on one night at the end of the financial year.

I'm looking forward to the say they don't have to do that. That's the benefit of this we strip out some of the one-off processes. We are making things more a part of the natural flow.

It will be there and their choice and available. I would love everyone encouraging employers who have moved to STP to take advantage at the end of the financial year there are less obligations now.

SAM ALLERT:

Leading up to Christmas everyone starts to get frantic. We are talking about regulatory pressures, I see this as a positive pressure small businesses are thriving in this period. Most small businesses, December is a huge period for them. We would rather them staying up to midnight or past midnight to benefit the business, to sell more products or services rather than regulatory processes.

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TRENT INNES:

Just about removing friction out of the process at the end of the day. There is so much friction around a small business we treat them like a big business with the burden of compliance. If we can remove that friction, it gets them back to what they want to do.

JOHN SHEPHERD:

Speaking of one-off things, Ange there is a question about salary sacrifice, reporting salary sacrifice that could apply to FBT how that is handled in STP?

ANGELA LEHMANN:

Your employer will continue to deduct it coming back as gross salary and wages, that's the same figure and the way it is reported on a payment summary. What is flexible in the design of STP when your employer does get around to working out the reportable fringe benefits at the end of the year usually around about May is when most employers are finalising the FBT returns with the reportable amounts.

They can report it at that time of the year or as they are finalising. We're not asking them to pro rata or try and calculate what that figure should look like per pay. We say once you get around to working out the FBT liability you have a reportable fringe benefit for employees put it in before you finalise and report it to us once.

JOHN SHEPHERD:

That's great. Another one from Shirley, a tax agent could lodge STP via, at the same time as the quarterly BAS. Employers currently lodge their BAS themselves via the business portal. Why can't the employer lodge the STP themselves via the BAS instead of going through an agent? The question is around this is for those who use Excel, that other great payroll system that gets used out there.

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ANGELA LEHMANN:

To the earlier discussion the portal is not an acceptable method of lodgement for an STP report. What we anticipate, the reason why we have made this quarterly concession we anticipate you would work closely with the registered agent to understand STP and use it as the building block to get to that point. It's about seeing your agent being comfortable you know what you are reporting in the STP report. They would use the proper channel to lodge that through to the ATO on your behalf.

Just to reiterate, no agent portal or business portal will be available for lodging an STP pay event.

TIM REED:

Can I ask a question, that is being set up as a transition?

JOHN SHEPHERD:

The agent one is a transition, a two year process so the employers would have to move to payday reporting.

TIM REED:

I would say to Shirley's question and add to the answer if that were the case what you are forcing is a two-step change ones to reporting at quarterly then change to reporting at every pay run. I would suggest for many small businesses you would be better to guide them to the end point to have them adapt once not two stages of change.

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SAM ALLERT:

Joining the dots, we all have lived and breathed STP. We get it. But providing low cast simple to use STP solutions all of us said we would provide one of those.

That should be another mechanism for that very powerful payroll solution of Excel if you are really running it on that to key into an STP lodgement mechanism. That's the intention of Reckon to provide, that's the intention from the EOI.

TIM REED:

The cynicism in your voice came through really well.

JOHN SHEPHERD:

I might go to each of you. I think we have touched on this on the way through. If there I any finals questions push them through. What would you say your message would be to small employers what's the call to action? What should people be thinking about looking to do next? Again noting that we haven't got legislation at this stage we are waiting to see what is happening. Trent?

TRENT INNES:

It will be heavily reliant on the legislation. People are unlikely to do something until they have to do it. It's going to be heavily reliant on that. What I would say even into the larger end of town don't wait until the last minute.

I'm old enough to remember GST coming through. A lot of them waited until the last minute. A lot of pressure was on the accounting system, setting that up. When the deferrals run out make sure you are ready to go. If deferrals are running out on 31

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December to do it on 27 December is not ideal. That's not a great time to do it. Do it earlier than that. Get on it now.

JOHN SHEPHERD:

Sam?

SAM ALLERT:

The first time I will disagree with Trent. Don't wait until it is legislated. That would be a defining moment. Drive yourself forward. Don't wait for the legislation get in now. 25% of lodgements already are for employees 19 or below, the mechanism exists, the payroll functionality exists.

You don't have to wait until July 1 there does haven't to be a big bang. Talk to a trusted advisor. If any fear or need education three of the major providers from Reckon, MYOB and Xero all the websites, webinars and education the advisor community and ATO and webcasts. I would say get ready now and enjoy it. It's not a big change and it's the right thing for the economy.

JOHN SHEPHERD:

I know you said three of the major providers. We've had feedback online why we have the three companies represented here. This is part of a series, as Angela said we have gone to the whole industry for solutions. Over time we will bring in our next webcast and others a range of different providers. It's not just about the products these guys might bring.

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It's the alternate solutions we are part of that register published at the end of the month. I assume people we will have a selection. Kerry is disappointed he can't be here from Sage. We will catch up with Kerry to get perspective.

TRENT INNES:

On the point, Sam, what I meant, the feedback we are getting from accountants and bookkeepers in that below 19 they are looking for clarity. They are telling me we're not going down the path until we get certainty. There will be some to opt in. We will encourage them. They can't have certainty around the process.

TIM REED:

I would encourage everyone with payroll software STP is there and available to start using it. There is no doubt that if you wait until the moment that it's legislated which is what lots of people do, that last possible moment everyone is frantic. You as advisors to small businesses you are busy, clients are bombarding you. All the call centres, are, et cetera.

If the change is simply turning on a capability that exists in the software today do it today. It is a streamlined process, and it will save time at the end of the financial year. That's a busy time of year. I think the wait is probably for those who don't have a solution. Therefore would have to go and think about a more major change. It is pretty natural that people will wait for the legislation to come, to see the time frame for that to happen.

I would say start talking about it again in conversation the longer we give people to prepare, the longer we give them to adjust the more able they will be ready to take that step.

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I would for anyone who is any client who is using software payroll software turn it on immediately. For those others make sure the education starts.

TRENT INNES:

It's literally a five minute job, taking five minutes from start to go to get it accept up. We're not talking days or weeks, five minutes.

TIM REED:

When we get the API for onboarding we will get it from five minutes to seconds.

TRENT INNES:

It will be seconds.

JOHN SHEPHERD:

Ange what's the ATO message to small employers - the call to action?

ANGELA LEHMANN:

I reiterate the Commissioner's message, don't panic. There will be many options. The transition period will be over an extensive time. We will work with you, making it as smooth as we can. It's not about panicking that 1 July is the day. As we spoke about earlier 15,000 small businesses are already reporting with positive feedback. The comment, "Is that it? We thought it was going to be so much worse than what it ended up being." It's not that hard. If you've got the software turn it on.

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Just start. We are here to work with you. We're not going to analyse that data and cause any grief to you. We want to work with you and get it right. Reiterating those messages is important. We be making sure we have lots of guidance. We are working hard to ensure by the time there is legislation, we can start moving forward you'll have all the guidance you need.

JOHN SHEPHERD:

A couple of other questions I will pick up on, we have talked a lot about agents through the webcast. Ange, what do agents actually see for the employers they look after when their employers start reporting. What will agents see?

ANGELA LEHMANN:

That's a good question. At the moment on the BAS or tax agent portals where they have access to that, they can actually go through to their employer clients on there. They can see I'll call it a lodgement summary, I'm sure it's got a more technical name.

A lodgement summary of all the pay events that have been submitted by that employer to the Tax Office. They will have a high level view of the day submitted. And show the W1 and the W2, the total gross and withheld amount for that file. It will not give them employee details. It doesn't go to that level. You will have that lodgement history to keep track of what your employer clients are doing.

JOHN SHEPHERD:

You are really popular online. There is another question. You mentioned about the pay event and the liability reporting. Confirming how will the ATO find out if the super is paid or not?

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ANGELA LEHMANN:

That's a good point. We have been working closely with the super fund industry and although the legislation when first passed said that the employers would tell us when they pay super, we have been able to work with the superannuation industry to move what we call MATSR, member accounts transaction services reporting. Those funds will be reporting to us on a regular basis what contributions are being paid into the member's funds. I said before previously a member contribution statement gets sent to the ATO once a year.

We have the ability to say what is reported and what's gone into member's account. We don't reconcile it or be exact to a dollar we make sure the employer is meeting the obligations.

JOHN SHEPHERD:

The panel, thoughts about the challenge, do you think people have a good understanding of super guarantee and what's on their pay slip. What it means and whether that is paid or not?

TIM REED:

I think all of the research that we have found, particularly the announcements that Kelly O'Dwyer said Australians have a poor understanding of super. They don't understand the insurance elements. Young Australians with multiple insurance policies through super they are not able to claim on any of them would lead me to believe that many don't.

We know how many lost super funds there are which is enormous, and I think the Government working with the ATO are doing a lot to reconcile those accounts back to the member, and so on.

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We are starting at a fairly low point. For a body like the ATO to be able to make those not down to the dollar reconciliations just broad matches will be pretty powerful.

SAM ALLERT:

Tim you spoke about an ecosystem that's the important thing, SuperStream, Single Touch Payroll or e-invoicing SuperStream and Single Touch Payroll provide that ecosystem for government bodies to report on and project all employees.

TRENT INNES:

Nothing more to add to that. I think there is a reasonably poor understanding of super, we are seeing that come through. I'm staggered by the amount of lost super, when we see that number reported there is an enormous number, there is a bit of education to happen.

JOHN SHEPHERD:

On the super guarantee displaying that information will be steady?

ANGELA LEHMANN:

It will be steady. I should have added when I spoke about the MATSR reporting it's only just started a lot of the funds are moving into that. We don't have a full data set for that.

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I know we have used the word a lot it's still a transition for them how we can use that data. Yeah, definitely slow and steady for that as well.

JOHN SHEPHERD:

I think we have covered a fair few of our questions that have come through and for those we haven't we will aim to get as many of those back to people as we can. As I mentioned earlier there is good information online at ATO.gov.au/STP. I want to give a massive thank you to Tim, Trent, Sam and Angela who stepped at the last minute which is fabulous.

I'm sure that Kerry and Deborah are watching online in Sydney. We will say hello to them. I will get back to Kerry from Sage like all of the software companies we need to reiterate they have worked well with us to co-design to get a system easy to use. There is a large amount of providers, over 100 with STP enabled products it wouldn't have worked without the close collaboration.

That's why it's such a good product and easy to use. I want to thank the live online audience. We've had well over 1,000 people online. And thank you for adding to discussion with your questions and comments. You can keep the conversation going after today's events sharing your experiences going to ATO community and sharing issues and answering each other's questions as part of that.

There will be a survey on the webcast, the link will be shared in the live chat facility. We would appreciate getting the feedback. Tell us what topics for the future webcasts you would like to see and guests you would like to see.

We will line up other providers but tax agents and bookkeepers others we have worked with to continue answer the questions. This has been a collaborative effort,

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across the industry, software developers, practitioners, businesses and ATO to come up with what I think is a pragmatic solution.

Finally the video from this event will be available on the event live stream page in the next few days. Thanks to everyone online. Thanks to the great live stream team for putting this event on. I hope you enjoy the rest of your day.

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