Phase 2 of Single Touch Payroll is Coming – Are You Ready?
As a business owner, you should already be aware of the Australian Government’s transition to Single Touch Payroll (STP). In the 2019-20 budget, the government also announced that STP would be expanded with additional information.
As required under the announcement, Phase 2 reporting is mandatory from 1 January 2022 onwards. The ATO will offer a flexible approach to the phase 2 rollout to ensure a smooth transition, depending on individual business circumstances.
How will Phase 2 help my business?
Employers have several benefits, namely the overall streamlining of interactions with the ATO, saving your business time. Benefits include:
Employee TFN declarations no longer need to be submitted to the ATO; from now on, you’ll simply keep these on file with other employee records.
Concessional reporting options, including closely-held payees or inbound assignees, can now be reported to the ATO via reporting income types.
Lump Sum E letters following a Lump Sum E payment no longer need to be provided to employees.
Upgrading your systems? Changing software or your employee’s payroll ID no longer requires an update to the ATO. This can be included in your regular STP report instead, making the resolution of issues with duplicate income statements for employees in ATO online services through myGov much easier.
You should also be aware that the ATO will begin sharing payroll information directly with Services Australia in real-time. This will make it easier to submit or request employment and payroll information about employees and also help them request information from your business, such as older payslips. Employees will also, eventually, be notified if they’ve made errors in reporting information to your business that may impact them at year-end. For example, if an employee has not notified you they have a Study and Training Support Loan, they’ll be reminded to provide this information to avoid a surprise tax bill.
Your STP report will require more information under phase 2, but you will still lodge your reporting in the same way, on the same date. In addition, there are no changes to tax and super obligations of end-of-year finalisation requirements.
What is changing?
Your existing payroll software should already collect the additional information required for the phase 2 reporting. This includes:
Disaggregation of gross: In the existing report, the gross amount covers many areas and payments. In the new reporting, you’ll need to provide more details.
Employment and taxation conditions: You will now need to include detail such as your employee’s employment basis, TFN declaration detail, plus when and why they leave the business.
Income types: To simplify individual income tax returns for employees, the phase 2 STP report includes reporting of income types. This also helps to identify payments with specific tax consequences or concessional reporting arrangements.
How can halkinbp help?
Our financial specialists at Halkin Business Partners can assist your business in understanding and meeting the Phase 2 STP reporting requirements. If you require more in-depth assistance, our HR consultants are available to ensure your payroll system is complaint and up-to-date for all reporting, superannuation, and other requirements. Speak with our team to learn more about how we can help. Contact us.
