Kerry Agiasotis, APAC President of leading business management software provider, The Access Group, explains why Australia’s SMEs will welcome compliance reprieve and technology support from the 2022 Federal Budget as pandemic recovery continues.
But is it enough to help the small businesses upon which this great nation is built?
“My team and I speak directly with many business owners across Australia on a daily basis, and one of the most common themes we hear is about the burden of compliance.”
“There’s no doubt about it, compliance is a necessary evil. It ensures businesses do right by their people and the community, reduces the risk of liability, and promotes consistency across an organisation – for employees, shareholders, and customers. Every industry has its own set of standards and best practices that businesses need to abide by in order to comply with laws and regulations at every level of government.”
“The complexity of compliance, however, occurs when a change to one element has an impact on other areas of a business. We live in a world where everything is connected – and the systems which underpin commerce are no different.”
“Federal Treasurer Josh Frydenberg had hinted at the compliance and red tape relief on the table for SMEs ahead of last night’s budget. This relief is somewhere in the realm of $800 million in annual savings on compliance, also delivering cash flow support to around 2.3 million tax-paying businesses. The specifics of how these savings will be achieved include a range of reduced administrative burdens, a reduction in GDP uplift rates (from 10 per cent to 2 per cent) and a change to how companies calculate PAYG installments as a factor of financial performance.”
“Details aside, a slowing of regulatory updates and compliance requirements will be a welcome reprieve for many SMEs still on the long road to recovery. It’s been long said that Australia is built on the back of small business, and never has this been felt more keenly than in the last two years. Any form of respite that scaffolds the recovery of these key contributors to our economy can only be a good thing.”
But does it go far enough?
“As a leading provider of compliance software solutions in Australia since 1987, The Access Group has seen its fair share of change in the world of business – specifically SMEs, given we work with more than 17,000 of them in ANZ alone. From the introduction of the Superannuation Guarantee in 1991, to rolling out GST in the year 2000, and everything in between – we’ve been at the coalface supporting these businesses and taking just a little the legwork out of the complex and ever-evolving world of compliance.”
“Without the security of a truly compliant software solution, keeping up with regulatory changes becomes burdensome for small businesses. It takes time, effort, and expertise away from other activities that may in fact drive a business forward – making it more productive, profitable and ultimately a more significant contributor to the wider community.”
“As an example, those in the HR and payroll space are currently staring down the barrel of the continued transition to Single Touch Payroll, with Phase 2 (STP2) upon them. This change will have significant knock-on effects throughout SMEs where resources are already often limited.”
“Making the necessary changes to provide the increased level of employee data required by STP2 is a monumental task. The expansion of the STP reporting system required by the ATO for all employers is having a significant impact on how businesses run their payroll, with changes impacting gross, allowances, overtime, salary sacrifice, and more. It’s a stressful situation as businesses need to ensure all compliance bases are covered while they also come to terms with new reporting requirements and language like ‘disaggregation of gross’. New changes for disaggregation of gross are spread across all the various pay components in a payroll system. New categories previously included in gross that require reporting include allowances, paid leave, overtime, bonuses and commissions, directors’ fees, lump sum, and salary sacrifice. There are now nine separate categories for allowances alone, including two new ones.”
And that’s just the tip of the STP2 compliance iceberg.
“To comply, SMEs must digitise their payroll with appropriate compliant software. And while it’s true that STP2 will ultimately deliver streamlined reporting and countless other business benefits – this can only be recognised after a business has undergone the digital transformation required to make it a reality. A transition that requires time, the right tools, and resourcing – all things that are in short supply as many SMEs recover from two years of upheaval and financial uncertainty. Partner support is also often required to navigate the rapidly changing compliance landscape and to reduce the possibility of human error – and this too comes at a cost. The Access Group already processes – on behalf of our customers – more than two million transactions for Single Touch Payroll every month.”
“Extending time frames for compliance is a great first step. And allowing flexibility around payments as a factor of financial performance is also a welcome initiative for SMEs. But the real game-changer is in supporting these businesses with the ‘Technology Investment Boost’ they need to realise the benefits of the digital revolution. Last night’s budget saw the announcement of support for small businesses looking to build their digital expertise and capability via a range of additional tax deductions – including a further 20 per cent on expenses and assets (up to a total of $100,000) and a 20 per cent deduction on external training to upskill employees in areas such as cloud computing, cyber security, and web design.”
“But the only way we will see true and long-lasting recovery and step change for the future of Australian SMEs is if the broader business community rally behind these initiatives to take on some of the heavy liftings on behalf of small businesses, to help them realise successful digital transformation.”
“That doesn’t mean burning down the infrastructure these businesses have in place already – often there are smart augmentations that can be made, apps that can be added, and integrations that can pave the way for a more agile approach. This is the very reason The Access Group launched its Workspace solution – to help businesses surround the technology they already have with the technology they need to remain compliant and to enable growth. As opposed to building again from the ground up. It’s our way of supporting SMEs in the most efficient and financially effective way possible.”
“The right technology and software are increasingly required by businesses of all sizes to enable quick compliance, and the upshot of that means efforts can be redirected from red tape and back into the tasks that drive long-term growth. And that’s good news for every budget.”
This post was aggregated from Dynamic Business (https://dynamicbusiness.com).