Single Touch Payroll (STP) Phase 2 is coming! If your business pays wages, you may need to start meeting some new reporting requirements from 1 January 2022.
This guide covers what you need to know about those requirements, so read on to learn more!
What is STP Phase 2?
STP Phase 2 makes reporting easier for employers who submit employee information to multiple government agencies.
When the Australian Tax Office (ATO) first introduced STP, they required businesses to submit more complex data manually. The ATO now requires that data be recorded under STP.
How does STP Phase 2 affect my business?
There are quite a few data points that need to be considered for your STP Phase 2 reporting. Here are some of the biggest changes to consider:
- Disaggregation of gross – Quite possibly the biggest change, you will now need to separately associate and report each component of gross salary against a code, including gross salary, paid leave, overtime, bonuses, allowances, commissions, director fees, lump sum W payments and amounts salary sacrificed. We know that can be a huge ask for many employers, which is why we are creating a tool for foundU customers.
- Tax file number declarations – Although optional, you no longer need to send through employee TFN declarations. This data will now be part of your STP reporting via an automated tax treatment code for each employee.
- Termination reason – If someone leaves your business, you will need to provide a reason in your STP report. This means no more employee separation certificates.
- Child support garnishee/deductions – You now can include child support garnishes and deductions in your STP report. This reduces the need to submit separate reports to agencies every month.
- Employment and payment types – You will now need to specify an employee’s work type, including whether they are full-time, part time or casual. You will also need to assign each employee payment an income type (e.g. salary and wages, closely held payees etc.)
- Lump Sum E payments – If you make a Lump Sum E payment, you no longer need to send letters to your employees.
- Salary sacrifice – Salary sacrificed amounts now need to be included in your STP report from Phase 2.
- Switching payroll systems – If you decide to switch to another payroll software, the ATO can link the BMS ID/payee ID from your previous payroll platform to the ID generated by the new platform.
When does my business need to be compliant?
We’ve been preparing for STP Phase 2 for a while now and are building out new functionalities to make it easier for our customers. We have also been approved for a deferral until September 2022.
If you’re not a foundU customer, your digital service provider should update you on their deferral and how that impacts you.
The ATO have also confirmed there won’t be penalties for genuine mistakes made under STP Phase 2 reporting until 31 December 2022.
Still worried about staying compliant?
Not a foundU customer and worried about compliance? We get it – staying on top of even the smallest of changes can be a big challenge for businesses.
That’s why we developed the foundU platform. We empower businesses just like yours to work more quickly, accurately, and strategically, while taking the complexities out of onboarding, rostering and payroll.
Want to know more about foundU? Book a Demo.