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All you need to know about Single Touch Payroll Phase 2

    Written by Julie Cairns, an Ashfords Trusted Advisor


SINGLE TOUCH PAYROLL (STP) PHASE 2

The ATO are corresponding with employers to ensure that they are STP Phase 2 ready. Ashfords have compiled the following key information to address your questions about the STP Phase 2 program.

What is STP Phase 2?

STP Phase 2 is an extension of the Australian Government STP initiative which originally started on 1 July 2018. It expands the program to capture more detailed payroll information.

When does STP Phase 2 start?

The mandatory start date for STP Phase 2 was 1 January 2022, however, the ATO have adopted a flexible approach to the transition. A number of Digital Service Providers (DSPs) including Xero and MYOB have secured deferrals to allow more time to upgrade their solutions to meet STP Phase 2 reporting requirements. Xero have secured a deferral until 31 December 2022.  Similarly, MYOB have a deferral until 1 January 2023.

What is changing with STP Phase 2?

Many employers will find that the additional information required is already captured by their current payroll software. The key changes include:

  • Gross income will be disaggregated to report the various components.
  • Reporting employment and taxation conditions for employees including TFN or ABN, commencement date, employment basis and tax treatment via a new 6-character code.
  • Reporting income types to identify amounts with specific tax, super or social security treatments.
  • Reporting country codes for Australian residents working overseas.
  • Option to report child support garnishees and deductions.
  • Option to provide previous Business Management Software IDs and Payroll IDs.

What are the benefits to employers of STP Phase 2?

STP Phase 2 will streamline employer interactions and ease the burden of reporting employee information to multiple government agencies. The key benefits include:

  • Removing the need to send TFN declarations to the ATO (although these should still be completed and held with employee records).
  • Notifying concessional reporting via income types (e.g. for closely held employees).
  • Removing the need to provide Lump Sum E letters for back payments to employees.
  • Notifying changes in software or employee payroll IDs to fix issues with duplicate income statements through myGov (only if this functionality is supported by your solution).

How can I get support with the STP Phase 2 rollout?

Contact your Ashfords Trusted Advisor as soon as possible to receive guidance regarding your transition to STP Phase 2 reporting.

Contact us today for more information.

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