Single Touch Payroll (STP) Phase 2 is Coming…

Single Touch Payroll (STP) is how you send your payroll information to the ATO and it’s been around since July 2018. The ATO is expanding STP to include additional information in your payroll reporting. They’re calling this expansion STP Phase 2 and it starts on 1 January 2022.


What do I need to do?

Your current STP reporting won’t change. However, before STP Phase 2 starts, you’ll need to make sure your payroll information meets the new requirements. This includes updating some employee details and checking your ATO reporting categories.

What can I do now?

If you don’t like leaving things to the last minute, you can start updating some of the details in your payroll software now.

What if I prefer to wait?

MYOB, Xero, Reckon and others have obtained an STP Phase 2 deferral from the ATO, which will allow users until 1 January 2023 to update payroll information to be STP Phase 2 compliant.

For everyone else, the ATO has advised that employers, who begin reporting additional payroll information as required under STP Phase 2, by 1 March 2022 will be considered to have met its 1 January 2022 deadline.

What additional information is being reported?

The ATO is looking to patch knowledge gaps in the payroll submission process and obtain a better understanding of employee payment details. So, in addition to the payroll and employee data you’re already sharing through STP Phase 1 (salaries, PAYG, superannuation), Phase 2 will involve the capture of the following new fields:

  • paid leave
  • allowances
  • overtime
  • child support deductions
  • salary sacrifice
  • lump sums
  • country codes

Under STP phase 2 you will also be required to separately itemise the components which make up the gross amount. You will need to report all allowances separately, not just expense allowances that may have been deductible on your employee’s individual income tax return.

The main additional reporting items to be aware of relate to the following:

  • Tax file number declaration: This will all be included in your STP report via an automated six-character tax treatment code for each employee and as such TFN declarations will no longer be required to be sent to the ATO.
  • Termination reason: The reason why someone leaves a business will need to be provided in your STP report, eg voluntary or a redundancy.
  • Employment basis: Previously optional, it will become mandatory to report an employee’s work type. This includes full-time, part-time or casual, along with new categories like labour hire, volunteer agreement or non-employee.

Need Assistance?

Whilst most of the implementation will be automated within your payroll software, should you need assistance, get in touch – we will be happy to assist!

Drop us a line at +61 8 6489 0600 or click below to contact us for more information.

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