How real is real-time for payroll compliance filings? How real is real-time for payroll compliance filings?

How real is real-time for payroll compliance filings?
30 Nov 2015

There is change afoot. Payroll compliance filings are being dragged into the limelight and closely examined for opportunities for improvement. Countries are starting to understand the value of having data in a more automated, accessible and timely fashion.

Ten years ago, monthly tax filings were processed manually, through mailed forms or in many countries, hand delivered. An onerous process would then ensue of receipts, stamped documents and lost records. While many countries today still use these antiquated methods, many nations are moving into the 21st century and creating online and real time integrations to facilitate the payroll compliance filings process.

So who is on the bandwagon? The United States started the process of automation years ago, not only at the federal level, but on a state-by-state basis also. Then came the economy collapse in 2008 and the United Arab Emirates (UAE) made an unprecedented leap forward and instituted the Wage Protection System (WPS) to ensure workers in the construction industry got fairly paid for work performed.

This was mainly instituted because builders were abandoning projects and leaving workers in the lurch without payment. From these beginnings, the world has stepped forward with integration schemes including real time information (RTI) in the UK in 2013, Superstream in Australia, e-Social in Brazil and DNS in France. So what do these programmes have in common? They ensure that the government has up to date, accurate information about the pensions, social schemas, and workers’ wages. Here are a couple of examples:

Australia’s Superstream

This automated programme requires employers to make payments automatically into the superannuation (pension) schemes for employees. In Australia, employees may select from a variety of superannuation programmes, which all have different mechanisms for payment.

With the advent of Superstream, all superannuation payments go through the same standard interface. The programme started with the largest employers in November 2014 and all companies including the smallest must comply by 30 June 30 2016. Employees are required to provide the details of their superannuation programme to their employer which includes their SMSF’s Australian Business Number (ABN), the SMSF’s bank details (BSB and account number) and an electronic service address which each employee must set-up themselves. The electronic services address allows the programme to send messages to the employee regarding contributions

Brazil’s e- Social

This programme does not change the obligations of companies in Brazil, but rather automates and streamlines how employee data is sent to the government. This includes payroll, social security, tax obligations and other labour related information. It will gradually replace withholding forms like CAGED, RAIS, SEFIP and GFIP. The overall goals are to simplify the compliance process and improve the accuracy of data submitted. The date for companies to comply with this new program has been extended several times. The latest date requiring all organizations to comply is September 2016.

France’s DNS

Similar to e-Social in Brazil, France’s Declaration Sociale Nominative (DNS) is a programme to streamline the filing of specific forms with the government. In this case, the forms are related to hires, various leaves and changes to pay.

Some examples include the requirement to send data within three days of a medical, maternity, paternity, or leaver to the government. Additionally any bonuses or premiums paid to employees must be sent with the effective dates. Another twist included in this programme requires employees on parental leave or sabbatical to receive pay slips. Companies are required to comply with this programme by January 2016. So far, there has been no mention of an extension of this deadline.

Integration is becoming more and more common as governmental organisations are trying to streamline their internal processing and improve the accuracy of information they receive. These are positive steps for both employers and government agencies, even though the implementation of such programmes is often labour intensive and painful. The improved efficiency and accuracy of the data will reduce costs for both constituencies. With the advent of technology and integration, the world is getting smaller, faster and smarter one country and one payroll at a time.

Michele Honomichl

 

 

There is change afoot. Payroll compliance filings are being dragged into the limelight and closely examined for opportunities for improvement. Countries are starting to understand the value of having data in a more automated, accessible and timely fashion.

Ten years ago, monthly tax filings were processed manually, through mailed forms or in many countries, hand delivered. An onerous process would then ensue of receipts, stamped documents and lost records. While many countries today still use these antiquated methods, many nations are moving into the 21st century and creating online and real time integrations to facilitate the payroll compliance filings process.

So who is on the bandwagon? The United States started the process of automation years ago, not only at the federal level, but on a state-by-state basis also. Then came the economy collapse in 2008 and the United Arab Emirates (UAE) made an unprecedented leap forward and instituted the Wage Protection System (WPS) to ensure workers in the construction industry got fairly paid for work performed.

This was mainly instituted because builders were abandoning projects and leaving workers in the lurch without payment. From these beginnings, the world has stepped forward with integration schemes including real time information (RTI) in the UK in 2013, Superstream in Australia, e-Social in Brazil and DNS in France. So what do these programmes have in common? They ensure that the government has up to date, accurate information about the pensions, social schemas, and workers’ wages. Here are a couple of examples:

Australia’s Superstream

This automated programme requires employers to make payments automatically into the superannuation (pension) schemes for employees. In Australia, employees may select from a variety of superannuation programmes, which all have different mechanisms for payment.

With the advent of Superstream, all superannuation payments go through the same standard interface. The programme started with the largest employers in November 2014 and all companies including the smallest must comply by 30 June 30 2016. Employees are required to provide the details of their superannuation programme to their employer which includes their SMSF’s Australian Business Number (ABN), the SMSF’s bank details (BSB and account number) and an electronic service address which each employee must set-up themselves. The electronic services address allows the programme to send messages to the employee regarding contributions

Brazil’s e- Social

This programme does not change the obligations of companies in Brazil, but rather automates and streamlines how employee data is sent to the government. This includes payroll, social security, tax obligations and other labour related information. It will gradually replace withholding forms like CAGED, RAIS, SEFIP and GFIP. The overall goals are to simplify the compliance process and improve the accuracy of data submitted. The date for companies to comply with this new program has been extended several times. The latest date requiring all organizations to comply is September 2016.

France’s DNS

Similar to e-Social in Brazil, France’s Declaration Sociale Nominative (DNS) is a programme to streamline the filing of specific forms with the government. In this case, the forms are related to hires, various leaves and changes to pay.

Some examples include the requirement to send data within three days of a medical, maternity, paternity, or leaver to the government. Additionally any bonuses or premiums paid to employees must be sent with the effective dates. Another twist included in this programme requires employees on parental leave or sabbatical to receive pay slips. Companies are required to comply with this programme by January 2016. So far, there has been no mention of an extension of this deadline.

Integration is becoming more and more common as governmental organisations are trying to streamline their internal processing and improve the accuracy of information they receive. These are positive steps for both employers and government agencies, even though the implementation of such programmes is often labour intensive and painful. The improved efficiency and accuracy of the data will reduce costs for both constituencies. With the advent of technology and integration, the world is getting smaller, faster and smarter one country and one payroll at a time.

Michele Honomichl