Single Touch Payroll (STP) reporting was introduced to streamline the way employee payroll information is reported.
STP Phase 2 has been rolling out since 1 January 2022. Many major software providers had applied for deferrals to get their software up to date. These blanket deferrals are coming to an end with the majority of providers ready to go.
- MYOB are ready and employers need to be reporting by 1 January 2023
- XERO are ready and employers need to be reporting by 31 March 2023
- RECKON are finalising their changes with deferrals for all their users until 30 June 2023.
Like STP, STP Phase 2 has some impact on all businesses that employ staff and businesses are now either reporting or preparing to report using their chosen software.
These changes will mean at least a minor adjustment to payroll processes for all employers. The extent to which the additional reporting is required will ultimately depend on the size, structure and type of employees of each individual organisation, as well as the systems and processes they already have in place.
STP Phase 2 introduces changes that reduce reporting requirements across the below 4 areas:-
- Tax File Number Declarations
Information collected from TFN declarations – including the TFN itself, employment type and whether the employee has a HECS-HELP debt — is to be included in STP reports and the declaration itself will no longer need to be sent to the ATO.
- Employee Separation Certificates
These certificates are no longer required, as the reason why an employee has left the business will now be provided via STP reports.
- Lump Sum E payments
Previously, 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
Businesses will have the option to include child support garnishees and deductions in their STP report, reducing the need to provide separate advice to the Child Support Registrar.
Additional reporting requirements will be required in the following areas:-
- Employment Type
Previously optional, 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.
Business owners must comply with STP Phase 2 or potentially face penalties from the ATO.
HOW CAN ACCURA HELP
If we report your STP then we are already in the process of updating your software.
For our existing clients please call your Accountant or Bookkeeper if you are unsure of any changes that you believe you may need to make to be STP ready and compliant.
You can count on the team at Accura to support you through this new and evolving ATO initiative.