Single Touch Payroll: Department of Finance’s Big Break

Single Touch Payroll: Finance’s Big Break

Single Touch Payroll (STP) reporting for Small employers with 19 or less employees started from 1 July 2019 while large employers with 20 or more employees have already started since 1 July 2018. At the Mastering SAP Sydney, Matt Voce (Local Product Manager, SAP Australia) highlighted STP’s deadline on 1 July 2019.

Single Touch Payroll, the latest tax and superannuation reporting software, has been reported to massively cut costs across multiple agencies addressing the federal Department of Finance’s longstanding concern on SAP’s software bills. 

The public service’s official source has shared that a Finance “digital solution for [STP] for its clients that consume the payroll service” across nine government agencies has come at “an average cost for each agency of around $65,000” rather than $600,000 each.

Finance’s Service Delivery Office (SDO) led the rollout of STP. Finance claims that the implementation and ongoing costs for its clients such as running, maintenance and upgrade costs have been reduced by the standard solution.

The lack of integration of STP functionality in the big financials and payroll vendors’ existing installs have been contributory to the hurdle of the STP roll out, a legislated tax reform requirement for many organisations. 

As STP compliance is compulsory, software users who were found non-compliant are reluctant to expensive major ERP and payroll upgrades or overhauls that arise from integration and modifications of legacy systems.

The Band-Aid solution has been STP exemption certificates that businesses would request based on the inability of their existing software platform to perform the functionality of auto-report payroll data directly to the ATO, which is critical in monitoring tax cheats, especially contractors in risky areas like cleaning, couriers and IT.

Recognising the importance of STP functionality, the Tax Office has been pushing the SAP and Oracle to integrate it into their platforms. The two software giants take the vast majority of major government and corporate payrolls where contractors exploit a lack of visibility.

Finance’s Holy Grail

A low-cost standardised SAP-STP solution has been deployed by Finance to give the revenue agency visibility over a small army of IT contractors, cleaners and other managed service provider staff across much of the public service. Many government agencies are mandated to comply with STP requirements with urgency. This development is deemed to be a massive tactical victory for the ATO.

Likewise, the SAP-STP solution sets the standard for compliance, even across state governments using SAP and Oracle legacy-payroll –systems.

In the Finance’s annual report, SAP-STP solution has been successfully implemented by SDO in May this year. The full-financial year’s reporting is anticipated to be released by next June.

According to Finance:

“The solution was implemented at a technical cost of around $600,000, representing an average cost for each agency of around $65,000. In comparison, estimates for a single agency implementation cost are five times higher.”

“If applied across the nine SDO clients, this would total around $3 million. Through the implementation of STP as a shared services offering, the SDO delivered to its clients a solution that is standard, compliant with legislative requirements and achieves value for money by removing the cost of duplication,” Finance further stated.

Leave a Reply