The alleged $165 million Plutus payroll scandal could have been avoided if automated payments technology was used by employers to make taxation payments directly to the Australian Taxation Office (ATO) rather than relying on a third-party payroll company, Plutus, to make payments on their behalf, which opened the opportunity for fraud.
“Removing the need for a third-party involvement to handle the payroll is the most logical and immediately available solution to restore trust to employers and the ATO that the payroll and PAYG system is operating with zero opportunity for fraud,” said Don Sharp from Integrated Payment Technologies (InPayTech).
“Employers caught up in the Plutus Payroll fraud could still be liable for tax that was stolen by the payroll company as they remain responsible for those tax payments which never made it,” he said.
InPayTech has developed a unique payments technology, PayVu, which delivers a greater certainty for employers and the ATO as it fully automates payroll and tax payments and it eliminates the need for the third party handling of monies.
“PayVu eliminates the need for employers to outsource payroll services and it therefore removes the opportunity for illegal behaviour,” said Sharp.
PayVu is like an overlay service that will sit over the top of the New Payments Platform (NPP), which will be introduced from July 1 this year. The NPP will enable businesses and government agencies to make faster payments, with near real-time funds availability to the recipient, on a 24/7 basis. Each payment message will be capable of carrying much richer remittance information than existing systems.
Similar to the NPP infrastructure that will support overlay services, PayVu offers an innovative payment service to end-users such as employers.
“PayVu goes a significant way to reducing the opportunity for payroll fraud. It sits within the existing banking system and can be used by employers to fully automate payroll payments to employees and taxation payments to the ATO,” Sharp said.
“Importantly, PayVu speeds up payments and it removes the need for third parties such as payroll companies and clearing houses to make payments on their behalf, without detracting from employers’ access and control of payments,” said Sharp.
The Plutus payroll scandal has been labelled Australia’s largest white collar crime, with increasing calls for additional legislative crackdowns on those entrusted to process the pay, benefits and taxation of working people.
“The unfortunate story of alleged corruption and greed behind the doors of Plutus Payroll should serve as a reminder that no amount of additional laws can prevent those with the knowledge, resources and criminal intent to illegally exploit existing systemic loopholes.
“The key to avoiding such fraud is to fully automate payments at the employer level, which takes the opportunity away from third parties to pocket monies intended for the ATO and other parties,” said Sharp.
“Using internet banking, PayVu bridges the gap between accounting and payroll systems and the ATO. The product gives time back to business owners and their bookkeepers by reducing the payment process from hours to minutes and it adds certainty to the outcome by ensuring payments are received by the intended recipients virtually on the same day they are made,” he said.
“There are no opportunities for payroll backlogs, delays or fraud.”