Since the ATO’s Single Touch Payroll (STP) scheme began on July 1st 2019, the program has been successful in reducing the reporting burden for employers, as well as making life easier for employees at tax time. Building on the success of its initial implementation, the ATO commenced ‘Single Touch Payroll – Phase 2” to report additional information digitally through established STP platforms and connections. Unlike the initial STP implementation, this won’t change much for employers and employees, but will provide more precise data to the ATO and other agencies in real time.
What is Phase 2?
STP Phase 2 will report additional payroll information to both the ATO and related government agencies (such as Services Australia). On top of the wages, PAYG withholding and superannuation information already reported through STP, phase 2 will include the reporting of additional items such as:
- Termination reasons (which will see the end of separation certificates, the same way the original STP implementation saw the end of annual payment summaries)
- Employment basis (which had previously been optional to report)
- Salary sacrifice amounts
- Breakdown of gross payments, separating out allowance types, bonuses and commissions, directors’ fees, overtime payments and leave payments
- Country codes for employees who report to tax jurisdictions outside of Australia
When does it start?
STP Phase 2 was set to commence on 1st January 2022, however a number of software providers (including Xero, MYOB and Payroller) have received deferrals to the ATO’s commencement date, for a period up to twelve-months.
Do I need to upgrade or change my payroll process?
No. Business owners and payroll processors will not need to do anything to register for STP Phase 2 if they are already set up for STP on the systems currently used to process payroll. Nor will they need to apply for a deferral for Phase 2 if their software does not yet support STP Phase 2, if their software provider has already received a deferral from the ATO.
Is there anything else needed to prepare?
However, iIn preparation for STP Phase 2, we are recommending business owners and affected persons check if their software provider has received a STP Phase 2 deferral, and when this deferral expires. It is also important they learn about the additional items that will be reported in STP Phase 2 and understand how to report this data to the ATO accurately. A review of information included in the above mentioned categories is likely to be required before Phase 2 commences for your software provider.
If you need any assistance setting up Single Touch Payroll, or have any questions regarding STP Phase 2, Accru’s payroll experts will be more than happy to assist you through the process. Please contact us here.