Single Touch Payroll (STP) Phase Two. Are You Ready?
After the successful rollout of STP reporting in 2019, phase 2 is on its way. The goal for STP2 is to make it easier and quicker for employers to report information about their employees and reduce some manual processes and forms long term. The challenge for most employers will be configuring their payroll system to meet the new reporting requirements, which will depend on your current solution.
For our client base we will be handling the transition end and notifying when complete, since we offer a comprehensive payroll service. If you are a current client and you receive any communication from the ATO, please direct this to our Payroll Team.
The transition to STP Phase 2 starts from the 1st of January 2022 and if you start reporting before the 1st of March 2022, you won’t need to apply for a deferral with the ATO.
However, if your payroll software provider (or DSP Digital Service Provider) has a bulk deferral, then you may have more time.
The second phase of STP will make it easier for employers to report specific payment details made to employees across all income streams.
- A) Gross Income, a breakdown which includes:
- Gross residual (excluding below)
- Salary Sacrifice (including Salary Sacrifice Super & other Salary Sacrifice)
- Bonus & Commissions
- Director Fees
- Paid Leave (not limited to; Cash-out of leave, Paid Parental, Workers Compensation).
- B) Allowances, a breakdown which includes:
- Car expense, laundry allowances, meal allowance, travel, accommodation.
- C) New fields will be introduced to give more accurate descriptions ie;
- employment basis
- reason for cessation
- tax scale
- offset amount
Child support agencies will now receive reports for deductions or wage garnishing as a total for the period. No more separate reporting is necessary. It will also be easier to report on back payments with an updated capability to capture back payments and payments in arrears for previous reporting periods.
What Remains the Same.
For Payroll, STP reports are due on or before payday unless the employer qualifies for a reporting concession. Clearer & cleaner data remove misunderstandings around BMS ID (i.e. a unique identifier for each payroll software provider) and Payroll ID which resulted in duplicate records in the past.
Employees will have one easy-to-view account on MyGov with all their information in one place. The benefits are less paperwork and more clarity about what type of pay they’re receiving, which can help them stay compliant when dealing with taxes or other reporting obligations. It will make tax time easier and more understandable.
For Employers, it makes it easier to distinguish between the BMS ID & Payroll ID with no risk of duplication. Another great benefit is simplified admin: no more employee letters to explain payments in arrears, no more manual reporting of child support payments, no more lodging of employee TFN declarations.
Don’t wait until the last minute! The Australian Tax Office (ATO) has announced that it will be extending the 1st of January 2022 reporting deadline for employers until the 1st March 2022. If employers can’t meet this deadline, they should check with their payroll provider to find out if they have a bulk deferral. More information from the ATO can be found here.
If you need help with this, we are already implementing the changes in our systems and can work with you to be compliant contact us today.