Small business operators will be burdened with additional administrative challenges if not prepared for the new Quarterly Superannuation Guarantee which takes effect on 1 July 2003, cautioned Scott Doyle, Managing Director of ADP Employer Services.
The new legislation requires as a minimum, quarterly payment of employee superannuation as well as written notification to each employee of the amount and destination of contributions made on their behalf within 30 days of each contribution.
When you consider that around 15 percent of employers in Australia are currently not paying superannuation quarterly and that the only reporting requirements are annual members statements, the additional administration burden could be significant, especially for small businesses, Doyle said.
Transitional rules will exist to help employers adjust to their new responsibilities for the first two quarters of the 2003/2004 financial year. Beyond that however, penalties for non-compliance will apply.
Employers could be fined up to $3,300 per employee for failing to report a contribution to an employee. And the employer can be imprisoned for up to 12 months for making a false or misleading report.
Businesses who are not compliant or diligent in this area may face serious penalties and administration charges for late or short payments and for not keeping updated records, Doyle said.
Doyle expects the demand for outsourced payroll solutions to increase with the introduction of the Quarterly Superannuation Guarantee as organisations look for ways to reduce their administrative burden in order to focus on their core business.
To assist its clients, ADP Employer Services has developed an automated reporting system to meet the new legislative requirements. We have been participating in the ATO Software Developers Consultative Group to develop solutions that meet the new requirements, Doyle said.
Industry analyst group Gartner ranks payroll as the third highest potential process for outsourcing, after education and training, and internal audit.
As Australia’s largest provider of payroll services and human resource administrative systems, ADP Employer Services already pays around 10 percent of Australia’s eight million strong workforce, Doyle said.
These clients are already benefiting from a fully automated payroll system which can handle the complete process, from capturing hours worked, to payments to employees and their nominated funds, printing and issuing of pay advices and now quarterly superannuation statements, through to the production of payment summaries.
It takes the hassle out of payroll allowing business operators to focus on their core business and supporting them in minimising the risks of non-compliance, Doyle added.
Somewhere around five percent of Australia’s 900,000 Small Medium Enterprises (SMEs) already use an outsourcing company to pay their employees for as little as $1,500 per annum compared with the estimated minimum cost of internalising the function of around $6,000 to $7,000 per annum. And that does not factor in the cost of penalties for not meeting the minefield of legislative requirements.
Many Australian SMEs are also adopting web-based payroll systems which provide a simple, immediate and secure solution, while giving the SME owner/manager the flexibility to complete the payroll at a time and place that suits them, freeing more time during the day to work in the business.
The new Quarterly Superannuation Guarantee is the latest in compulsory super requirements that have become more detailed and more onerous as the superannuation system has grown and evolved.
If the new Quarterly Superannuation Guarantee laws aren’t reason enough for small and medium businesses to consider outsourcing their payroll function, the proposed new Member Choice legislation that may potentially require a business to direct super contributions in as many ways as there are employees, probably will! Doyle added.
For more information on payroll outsourcing, contact ADP Employer Services on 1800 000 729 or visit www.asiapacific.adp.com
For further media information contact:
Terri Hosking
ADP Employer Services.
Tel: +61 (03) 9566 5100
terri_hosking@au.adp.com
ABOUT ADP EMPLOYER SERVICES ASIA PACIFIC
ADP Employer Services (ADP ES), a wholly owned subsidiary of Automatic Data Processing Inc., has been delivering outsourced payroll solutions and human resource administration systems in the Asia Pacific region for more than a quarter of a century. ADP ES has offices globally including Singapore, Hong Kong, Melbourne, Sydney, Queensland, Western Australia and South Australia, and has over 7,500 clients in the Asia Pacific Region. ADP has developed a range of payroll services and HR information management systems that go far beyond the regular payment of employee wages and salaries. These services can help ADP clients to increase business efficiency by enabling them to focus on what matters their core business. For further information about ADP Asia Pacific visit www.asiapacific.adp.com