Single Touch Payroll (STP) is being expanded to reduce the burden on employers who need to report employee information to multiple government agencies.
By now most businesses will be well versed in using the first phase of Single Touch Payroll (STP), an ATO initiative designed to streamline the reporting of employee pay, tax withheld and superannuation.
From 1 January 2022, businesses will be required to report additional information via STP Phase 2, eliminating existing reporting requirements in some instances.
STP Phase 2 changes that will reduce reporting requirements across these areas.
- Tax File Number Declarations – Information collected Tax File Number, employment type, HECS-HELP debt – will be included in the STP report and the declaration itself will no longer need to be sent to the ATO. Though they will still need to be collected and files in employee records – or processed in an Employee Onboarding system.
- Employee Separation Certificates – These certificates will no longer be required as the reason why an employee has left the business will now be provided via the STP report.
- Lump Sum E payments – If an employer makes a payment owing from previous years a Lump Sum E letter would need to be provided to the employee. This information must now be included in Phase 2 reporting, with details of the payment appearing in the employee’s income statement.
- Child Support – Options to include child support garnishees and deductions in their STP report, reducing the need to provide separate advice to the Child Support Registrar.
- What isn’t changing with STP in Phase 2? – The way you submit your STP report, the due date and the end-of-year finalisation declaration for each employee will not change. Tax and superannuation details will still be required as usual.
What do I need to do to prepare for STP Phase 2?
Step 1 – Familiarise yourself with STP2 requirements – Check out the ATO Single Touch Payroll Phase 2 employer reporting guidelines
Step 2 – Confirm your compliance deadline. The ATO has indicated anyone not reporting in STP Phase 2 by 1 March 2022 will require a deferral.
The software provider MYOB has secured deferrals for its payroll users. The ATO has granted MYOB a deferral until 1st July 2022. This means payroll users only need to apply for their own employer deferral if they won’t be ready by 1st July 2022.
Step 3 – Prepare an Implementing a plan that will step you towards your compliance deadline.
- Your payroll information meets the new requirements. This includes updating some employee details and your payroll setup to comply with the ATO reporting requirements.
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- Employment Type – Reporting of employment type will be mandated under Phase 2 reporting. Businesses will need to declare whether their employees are full-time, part-time or casual, in addition to new categories such as labour hire or volunteer.
- Disaggregation of Gross – Income will no longer be reported as a gross sum, instead each component must be itemised including salary sacrifice, overtime, paid leave, bonuses, commissions, director’s fees and allowances (allowances must also be individually itemised).
- Country Codes – If you have Australian resident employees working overseas, businesses will need to provide details of the host country.
- Your software will need upgrading. MYOB will be updating its software in advance of these changes
Talk to Acacia about having a Payroll STP Phase 2 Review – reach out to us at info@acaciacs.com.au or via +61 3 8560 5220. More information about this in January 2022.
