Research by small business platform Xero found the large-scale migration of payroll reporting to digital platforms in Australia would provide a $1.3 billion productivity dividend this financial year, coming in the form of 1 million hours saved per week in payroll processing alone.
Managing director Trent Innes said businesses already using digital reporting saved an average of 3.1 hours per week.
The company estimates one in five Australian businesses still use pen and paper for payroll record keeping.
“The move to STP is the biggest legislative change for small businesses since the introduction of the GST in 2000 and it will usher in a new era of digital connectivity for Australian businesses,” Mr Innes said.
“The Australian government has been working with digital software providers and advisers to keep pace with small business innovation at a national level. As a result, digital connectivity is transitioning from a small business nice-to-have to a have-to-have.
“Technology is empowering people to take more control over their business, operate with more accuracy, security and efficiency – and by doing so creating a greater impact for themselves, their community and their economy,” he said.
The ATO said last year some businesses would struggle more than others in the transition to a new online payroll system.
There are about 40,000 businesses already using the electronic system after businesses with more than 20 employees were required to use single touch.
In 2018, the ATO estimated about 15,000 companies with fewer than 20 employees had already moved onto single touch systems.
Separately on Tuesday, Assistant Treasurer Stuart Robert said the government was introducing new measures to help small businesses resolve disputes with the Tax Office.
A new small business concierge service will be established within the Australian Small Business and Family Enterprise Ombudsman’s office, created to help small businesses without legal representation.
A $100 co-payment will be made available to unrepresented small business, prior to applications to the Administrative Appeals Tribunal and dedicated case managers will assist with applications to review an adverse ATO decision, including affirming an audit or cancelling an ABN registration.
The changes will some into effect next month.