24 May Jonanthan Cartu Reports Tax letter you won’t get this year
They’ve been a mainstay of tax time – but group certificates are becoming a thing of the past.
In years gone by, Australian workers have had to wait to receive that document – also known as a payment summary – from their employer before they could lodge a tax return.
But a key change is wiping them out forever – and it’s good news for taxpayers.
news.com.au has launched the Money Project to help Australians deal with the financial
impact of the coronavirus.
It’s all thanks to Single Touch Payroll (STP), which is a new way for employers to report tax and superannuation information to the Australian Taxation Office.
In a nutshell, STP allows companies to report employees’ payroll information – such as salaries and wages, pay as you go (PAYG) withholding and super – to the tax office every time those payments are made.
STP reporting for small employers with 19 or less employees started from July 1 last year, while those with 20 or more staffers should already be reporting through the system.
The change has little impact on workers on a day-to-day basis – but it’s a big win for everyone come tax time.
H & R Block director of tax communications Mark Chapman told news.com.au while the change slowly started rolling out last year, this year many more people would be impacted.
“Many people will no longer get a payment summary from their employer – instead, those details will go directly to the ATO to generate an income statement,” he explained.
“Whether you go to a tax agent or download it directly from MyGov, it will be the exact same information – it’s just not coming directly from your employer anymore.
“Instead, it will come from the ATO and will be pre-filled directly into your tax return.”
In other words, the middle man is cut out of the process, meaning workers won’t have to lift a finger.
“Employers are now using software that ‘talks’ to ATO systems on a real time basis – it’s a way for the ATO to see what employers are doing,” he said.
“It removes the obligation to provide a summary to the ATO as they can see the information in real time.”
Mr Chapman said in theory, it made all payments more transparent, meaning it could be harder to get away with paying wages and entitlements incorrectly.
However, Mr Chapman said it could take a few weeks after the end of the financial year for that information to arrive, and that if you wanted to, you could also “do it yourself” more quickly by checking all your weekly or monthly pay slips, which would allow yourself or your agent to “reconstruct” the information.
He said as many Australians were more reliant on getting a tax refund this year due to the economic fallout of the coronavirus pandemic, those hoping to get their hands on their cash fast might be tempted to pursue that option and lodge their return “ASAP”.
According to Ben Johnston from leading Sydney accounting firm Willett Johnston Partners, while payment summaries weren’t being “totally phased out” just yet, it was “definitely much more efficient”.
“It will help a lot of workers who have little to nothing to claim – historically it has been cumbersome to lodge a tax return, but this is making it something that can be done in a relatively short time,” he said.
“The administration side of things is reduced for all involved.”
However, he said while it was a more efficient system, it would likely not be “robust enough” to catch out employers who weren’t complying with industrial relations rules.
Originally published as Tax letter you won’t get this year