Small business, payments system brace for payday super
Pensions are set for the most significant change in decades, but with one week to go before implementation, many businesses, and possibly the retirement system itself, are not ready.
From July 1, employees’ pension contributions must be deposited into members’ accounts within seven days of payday, rather than every three months.
Australian Taxation Office data shows two in five businesses already pay contributions more frequently than quarterly.
For Rachel Power, owner of Waterfalls Cafe and Gallery in Tasmania’s Mt Field National Park, the vagaries of regional tourism have pushed her to pay out early, well ahead of schedule.
“We’ve actually been paying weekly super for probably a year or two now because we’re very seasonal here in terms of cash flow,” Ms Power told AAP.
“Market forces are pretty crazy in Tasmania.”
Ms. Power, who also runs accommodation and retail businesses, employs between 15 and 30 people, depending on the season.
As chairman of the local business group, he is concerned about operators who are not ready for change.
“A lot of small businesses will be affected by this and they won’t be ready,” Ms Power said.
“When you have (accounting software) Xero, or even a program like Xero, these computer systems are there, ready to facilitate that.”
Australian Council of Small Business Organizations chief executive Matthew Addison said payroll technology had made the transition easier, but the seven-day period brought its own challenges due to the limits of pay clearing systems.
“I am concerned about the time it will take to receive payments through the payment system and recover those payments if they are declined,” he told AAP.
“I do not believe the ATO has systems in place to provide employers and their representatives with visibility into payday super data.”
The council wants to eliminate all penalties for businesses operating a payday retirement scheme in the first six months, especially given the already tense business environment.
“I think there will be a lot of confusion,” Mr. Addison said.
“A lot of small businesses will say the system isn’t right yet, so they’ll stick their head in the sand and wait, and that will be potentially disastrous because it won’t achieve the super payday vision.”
The tax office, on the other hand, took a reasonable approach to compliance with the legislation and promised to support businesses in the initial stages.
“We understand that when something is new you may not be able to get it perfect the first time,” deputy commissioner Emma Rosenzweig said.
“But it’s important to give yourself as much time as possible to get started, experiment, and correct mistakes as they arise.”
Research by Xero found that roughly nine in 10 businesses support wage advance help, but some are concerned about late payments and cash flow management.
“We are against it in terms of now being the time to be ready for these changes,” Xero’s ANZ general manager of strategy and operations Charlie Sheppeard told AAP.
He said businesses needed to understand and tighten their cash positions, use digital tools to streamline payroll and super payments and expand payment methods to maintain maximum cash flow.
“If something goes wrong, act quickly,” Mr. Sheppeard said.
“Talk to your accountant or accountant, your BAS representative.”
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