Total, by sector - - - - Cost offset ($ million) Business Community organisations Individuals Total, by source Agency - - - - Are all new offset? Yes, costs are offset No, costs are not offset Deregulatory—no offsets required Total (Change in costs – Cost offset) ($ million) = $0 Option 2: Stage 1 – Mandatory real time reporting of tax and superannuation obligations for all large employers (with 20 or more employees) with the option to voluntarily make payments in real time. All other employers can opt in voluntarily. Note: Voluntary involvement could reach 30% of smaller employers . This would increase on-going savings to about $135million and net savings to about $105 million (over a 10 year period). Average net annual regulatory (from business as usual) Change in costs ($ million) Business Community organisations Individuals Total change in costs by sector -$55m - - -$55m Cost offset ($ million) Business Community organisations Individuals Total, by source Agency -$55m - - -$55m Are all new costs offset? Yes, costs are offset No, costs are not offset Deregulatory—no offsets required Total (Change in costs – Cost offset) ($ million) = $0 Option 2: Stage 2 – Mandatory real time reporting of tax and superannuation obligations for all employers with the option to voluntarily make payments in real time. Average net annual regulatory costs (from business as usual) Change in costs ($ million) Business Community organisations Individuals Total change in costs Total, by sector -$230m - - -$230m
Impact Option 1 Leave the current processes in place Option 2 Mandatory real time reporting and voluntary real time payment of tax and superannuation obligations for all employers at the time of the payroll event Option 3 Mandatory real time reporting and real time payment of tax and superannuation obligations for all employers at the time of the payroll event Stage 1 Aggregate Stage 1 & Stage 2 Net compliance cost savings No change to compliance costs and no direct savings. Existing compliance cost burden remain unchanged. This is about $2.5 billion and over 10 years would amount to about $25 billion. Over 10 years the aggregate impact could be a potential saving of about $900 million. This results from the streamlined TFN declaration and Superannuation standard choice form for new employees, as well as automated reporting of PAYG Withholding. Over 10 years the aggregate impact could be a potential saving of about $2 billion. This results from the streamlined TFN declaration and Superannuation standard choice form for new employees, as well as automated reporting of PAYG Withholding. Over 10 the aggregate impact could produce a potential saving of about $260 million per year. These savings are produced from the streamlined TFN declaration and superannuation standard choice form for new employees, automated reporting and payment of PAYG Withholding and Superannuation obligations. Implementation cost for businesses No implementation costs to businesses. The potential implementation cost could be about $300 million which would be spread over a two to three year period. Changing and adapting record keeping systems will be the major driver. These are likely to include additional fees to account The potential implementation cost could be about $670 million which would be spread over a two to three year period. Changing and adapting record keeping systems will be the major driver. These The potential implementation cost could be about $670 million which would be spread over a two to three year period. Changing and adapting record keeping systems will be the major driver representing about $620
for changes to software; but for some smaller businesses there is likely to be a need to upgrade the digital systems they are using. are likely to include additional fees to account for changes to software; but for some smaller businesses there is likely to be a need to upgrade the digital systems they are using. million of the compliance costs. These are likely to include additional fees to account for changes to software; but for some smaller businesses there is likely to be a need to upgrade the digital systems they are using. On-going annual savings for businesses No on-going annual savings for businesses. Over time, some businesses may realise savings as a result of moving to digital interactions aligned to the Government’s Digital Transformation Agenda. Potential on-going annual savings could be about $135 million per year. Predominately from recordkeeping system improvements. These will emerge from the streamlining and greater automation of the withholding process. However, tangible savings will also emerge from forms particularly as some key forms will be substantially reformed – e.g. TFN declarations and Superannuation standard choice forms. Potential on-going annual savings could be about $295 million per year. Predominately from recordkeeping system improvements. These will emerge from the streamlining and greater automation of the withholding process. However, tangible savings will also emerge from forms particularly as some key forms will be substantially reformed – e.g. TFN declarations and Potential on-going annual savings could be about $330 million per year. Predominately from record keeping system improvements. These will emerge from the streamlining and greater automation of the withholding process. However, tangible savings will also emerge from particularly as some key forms will be substantially reformed – e.g. TFN
APPENDIX A: Single Touch Payroll risk register The following table is an extract from the Single Touch Payroll risk log which shows the major risks associated with the Single Touch Payroll project. Key Summary Description L&C Risk Mitigation Remedial L&C Short timeframes for law changes may lead to legislative changes not being made prior to implementation leading to delayed or partial implementation. Timeframes for drafting and enacting of law changes are very tight for pilot. Largest issue is for onboarding in the pilot year. Likely - Very High Working with OPAL and Treasury to maintain current view of timelines to ensure the project is able to meet short turnaround times. Likely - Very High The inherent complexities in the software systems used by many large employers may prevent or delay transition of some large employers and government agencies to STP Many large organisations utilise a range of integrated and interfaced software systems. Changes to these systems require complex and lengthy testing and assurance processes which may mean they have difficulty complying with mandatory compliance dates. This will delay benefits for this cohort, including some government sector organisations. Likely - High Consultation to be pursued with large business. Working with software providers to co-design solution. Likely - High Without law changes in pilot year the ATO may not be able to transmit employee data from retail onboarding leading to delayed benefits and a user experience that does not align with STP intent Without the proposed law changes during the year, which would allow The Commissioner to provide information from retail to the employee’s STP employer, the ATO may not be able to transmit information from retail on-boarding to the employer. Initial advice is that the employee would need to print the form to provide to the employer. OPAL will be seeking urgent general counsel advice on this matter. Likely - High Exploring additional options to either progress law change via other initiatives or look at interpretation or exemptions. Likelihood of this risk eventuating has reduced due to pilot commencing in 2017 – allowing several months between the current anticipated legislative change timeline and commencement of the pilot. Likely - High
If ASFP does not deliver as scheduled in December 2016 a number of projects will be impacted which may require build and/or schedule change resulting in increased costs. ASFP is scheduled to move Activity Statement financials from AIS to ICP in December 2016. This is a requirement for STP to deliver a pilot in early 2017. Delayed delivery of ASFP will require re-work and will have schedule and cost impacts. Even Chance - Extreme Regular meetings with ASFP and EST Program/Project Managers to maintain understanding of current status. Issues identified and escalated as appropriate. Even Chance - Extreme If Accounting Program of Work (APOW) does not deliver as scheduled in November 2015 a number of projects will be impacted which may require build and/or schedule change resulting in increased costs APOW is scheduled to convert all period and assessment details for Activity Statement accounts to ICP, create the role/period/assessment to support Activity Statement generation and processing, forecasting account periods, and support due date calculation and processing of deferred due dates in ICP. ASFP builds on these deliverables, and requires the foundational elements from APOW to be delivered first. Likelihood of this risk has been reduced due to delay of ASFP to December 2016 allowing greater contingency. Any delay to APOW beyond current ASFP timelines will impact ASFP and STP deployment. Unlikely - Extreme Continued monitoring through dress rehearsals and early escalation of issues. Unlikely - Extreme The extent and impact of defects resulting from the deployment of ASFP may result in the system becoming unusable. Therefore a decision will need to be made whether a rollback is required or external processing being at risk. Depending on the extent and impact of defects resulting from deployment of ASFP, may make the system (or associated systems) unusable. This will require a decision to be made whether deployment is rolled back if critical business functionality or external processing is at risk. Even Chance - Very High Successful deployment of ASFP into ICP is a dependency for deployment of DPR for PAYGW liabilities. Director Penalties could be deployed for SGC but this would result in limited realisation of benefits. If ASFP is rolled back, Director Penalties for PAYGW would continue using manual legacy processes. Even Chance - High