Small businesses are being urged to keep abreast of some of the key tax and compliance changes coming in 2020. The core changes taking affect this year could be lost in a busy business owners schedule. Information on some of the changes is below.
Taxable Payments Annual Reporting (TPAR)
Small businesses in certain industries are required to report information to the Australian Taxation Office (ATO) about payments they make to contractors.
While TPAR has applied to the building and construction industry for a while, it was extended to cleaners and couriers for the 2018–19 financial year and now has been further extended to road freight, IT, security, investigation or surveillance for the 2019–20 financial year.
The change even covers services by businesses that may not identify as operating within those particular industries. For example, if a business provides courier services (ie. A florist has a delivery service), even if it’s only part of their services, they may need to lodge a taxable payments annual report each year and include payments to contractors and subcontractors that provide courier services on their behalf.
If your business operates in one of these industries or you provide these services it is important to ensure you have your accounting software system correctly set up to enable ease of reporting of payments to contractors at end of financial year.
AUSkey to be scrapped
From 1 April 2020, the AUSkey system will no longer be used for businesses to report to the ATO. The AUSkey was a way to send business information to the government online. From 1 April 2020, you will need to use a myGovID and Relationship Authorisation Manager (RAM) instead.
The ATO website has information available on how to make the transition.
Single Touch Payroll Reporting (STP)
STP allows employers to send payroll information to the ATO, at the same time as their usual pay run. The intention of STP is to create transparency and guarantee employers are meeting their payroll obligations.
Small businesses (those with fewer than 20 employees) were granted a three-month extension to 30 September 2019 to make the transition to the digital reporting platform, and penalties are being waived until 30 June 2020. Penalties already apply for larger employers from 1 July 2019 for non-compliance.
There is also a deferral for closely held payees — generally family members working within a business — until 1 July 2020 to begin reporting payroll data through STP. The ATO will also be contacting businesses to encourage you to adopt STP. It is best to adopt STP while the ATO is taking a light-touch approach.