There are an estimated 300 million payroll transactions each year in Australia and many organisations still execute these manually, a process which adds time and resources while reducing efficiency.
For businesses, payroll comprises not simply putting the net salary in an employees’ account. There are different processes around the PAYG component, the 9.5 percent superannuation obligation and tax reporting.
Westpac is working with Commonwealth Government agencies such as the Australian Taxation Office to deliver a next-generation digital solution for the new Single Touch Payroll framework, which will streamline payroll processing under a set of national standards.
Legislation mandating STP was passed in September 2016, and covers payroll event and superannuation reporting and employee onboarding.
Employers with 20 employees or more will be required to report through STP from 1 July 2018.
Benefits of standardisation
At the Government’s invitation, Westpac is the only bank involved in discussions on the financial architecture required to make STP a success.
Westpac’s solution is a generic digital payments gateway for employers, payroll providers and superannuation funds, which will also be able to connect their software to the ATO.
Standards are yet to be announced or rolled out, but Westpac is also closely involved in the process of standardisation which, much like agreeing on standard rail gauges in the 19th century, can enable digital payments in the 21st century to function smoothly.
Through close consultation with stakeholders and understanding the aggregation points around payroll, which includes the employers, taxation software firms and payroll companies, the aim is to take as much friction out of the payroll process as possible, freeing up time and resources for companies to do what they do best – service their customers.
An important feature of Westpac’s solution is that it is “bank agnostic”.
The gateway will be delivered to all constituents and customers who will be able to use it, regardless of whether they bank with Westpac or a competitor.
Westpac’s STP network will function as a key piece of digital infrastructure, in much the same way as providing a new highway for all road users.
The bank’s involvement in the STP project comes after the successful roll-out of the QuickSuper solution for SuperStream, the payments gateway for superannuation payments which created a model and a precedent.
In rolling out QuickSuper, Westpac built a significant new capability which differentiates the bank as a leader in delivering next generation digital infrastructure. That expertise and experience is being recognised and leveraged in the creation of a new gateway for STP.
QuickSuper as a precedent
In the earliest days of SuperStream at the beginning of this decade, Westpac was invited to participate in the Government’s SuperStream Advisory Council and built the first new contribution gateway under the framework.
This enables businesses to pay their obligations faster and in a solution which allows them to meet their compliance needs with the Australian Taxation Office, which now has much greater visibility on how employers are meeting their super obligations.
For example, we came across one business with 129 employees which was paying into 117 super funds. Working with that situation was a highly challenging manual exercise, taking staff about a week to complete, four times a year.
For these businesses, Westpac’s digital solution has taken much of the pain out of superannuation, delivering new efficiencies around compliance as well as providing new levels of information transparency.
With QuickSuper and now with STP, Westpac has built a core and differentiating capability in new digital networks which all stakeholders can use to their advantage, improving the business environment for all.
The QuickSuper and STP models can also be adapted to scale, and Westpac is looking to further leverage its capability in new environments.
The new digital economy is about connectivity, networks and standardisation which can make the system faster and more efficient, and Westpac is taking a leading role in delivering this next-generation infrastructure.