Single Touch Payroll (STP) Phase 2: What now?
Single Touch Payroll (STP) Phase 2: What is it and does it apply to my business?
In the May 2019 Federal Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information, building on the first stage of STP which was made compulsory for most employers from 1 July 2019.
For background, the STP regime is a government initiative designed to reduce an employer’s burden when reporting to Government agencies such as the ATO & Services Australia. Under the regime, employers report employee payroll information to the ATO each time they are paid via STP-enabled software (eg. Xero).
When is the Single Touch Payroll (STP) Phase 2 start date?
The start date for Phase 2 reporting was 1 January 2022, however the ATO has advised that employers who provide the additional reporting required under Phase 2 by 1 March 2022 will be accepted as having met the deadline.
Digital service providers (DSPs) can apply for a deferral if they need more time to make changes and update their solutions. Such a deferral then automatically applies to customers of that provider. For example, Xero have advised that they have been granted a deferral until 31 March 2023. This means that all customers using Xero Payroll will also have until that date to report their first STP Phase 2 pay run.
For businesses that need more time to transition, you may apply for an extension beyond your software provider’s deferral. Registered accountants and bookkeepers will also be able to apply on your behalf.
On the compliance front, under Phase 2, genuine reporting mistakes will not be penalised in the first year until 31 December 2022.
What changes are included in Single Touch Payroll (STP) Phase 2?
TFN Declarations
Employers will no longer need to send employee TFN declarations (they will still need to be collected and filed in employee records, however).
Closely held payees
For businesses using concessional reporting, such as is the case for closely held payees, this can be communicated through income types.
Lump Sum E Payments
When making Lump Sum E payments, employers won’t need to provide Lump Sum E letters to employees.
Payroll Data Integrates with Services Australia
Payroll information employers provide to the ATO will be shared in near real-time with Services Australia, who can use it to streamline requests.
What isn’t changing?
· The way you lodge, pay and update events
· The due date for lodging events
· The types of payments that are needed
· Tax and super obligations
· End of financial year finalisation event requirements
In practice
Once your STP 1 solution is upgraded to offer phase 2 reporting, you can transition at any time up until the due date. The way you transition from STP 1 to STP Phase 2 reporting will depend on your circumstances and the solution you use.
You should follow your digital service provider’s instructions to upgrade your solution. Xero has an extensive library of resources to enable users to follow step by step to transition. The Xero resource hub can be found here.
If you would like a more detailed overview of the STP Phase 2 , please take a look at the ATO's Expanding Single Touch Payroll Phase 2 page here.
Our accountants understand STP requirements, and can help you successfully implement and benefit from these changes. Get in touch with one of our team to discuss further.
How we can help?
If you need more advice on this issue, please contact our team.
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