Advivo explains the things you need to know about the expansion to Single Touch Payroll.
Single Touch Payroll (STP) is the Australian government’s initiative to reduce the reporting burden for employers. In the 2019-20 Budget, the government announced an expansion to STP that will require employers to provide additional information to the ATO. This article runs through the changes and how STP Phase 2 will affect your business.
What is Single Touch Payroll Phase 2?
Single Touch Payroll (STP) Phase 2 is an expansion of STP to further streamline employer reporting obligations. This expansion changes the reporting requirements for employers who are expected to provide additional information to the ATO regarding their payroll.
The ATO has been working with Digital Service Providers (DSP) to implement Phase 2. If you’re unsure when you have to start reporting with Phase 2 changes, please contact your DSP (such as MYOB and XERO).
Xero payroll users need to have updated their software for STP2 by 31 March 2023. Xero resources can be found here.
MYOB payroll users need to have updated their software for STP2 by 31 December 2022. MYOB resources can be found here.
There is no need to wait until these dates to make the needed updates within your payroll provided your software provider has already implemented the changes so that you can do the updates.
Changes coming in STP Phase 2
The main changes coming to STP Phase 2 include:
Disaggregation of gross
In STP Phase 2, employers must itemise the gross amount. This includes:
- Overtime
- Paid leave
- Bonuses
- Commissions
- Salary Sacrifice
- Director’s fees
- Allowances (allowances must also be itemised)
Tax File Number (TFN) declaration
Instead of submitting a TFN declaration separately to the ATO, this is now included in the STP report.
Income types
This is something employers already report to the ATO, but STP Phase 2 introduces more flexibility to:
- Identify payments made to employees with specific tax consequences
- Make it easier for employees to complete their individual tax returns
- Help the ATO identify where you’re using a concessional reporting arrangement
Child support
Employers can now include this in the STP report, reducing the need to give separate remittance advice to the Child Support Registrar.
Country codes
If an employer makes a payment to an Australian resident working overseas, the employer must provide information about the host country.
What’s not changing?
Although you are required to provide the ATO with more information, the way you submit STP reports has not changed.
As stated before, once your software can manage the changes you need to make, there is no reason why not to make the changes required. Please ensure these are done by the date required for your software as after that date you will no longer be covered by the exemption that the ATO has granted your software provided and you will then be able to be fined for not meeting the new requirements. So it is important to act on this.
How we can help
Here at Advivo, we understand that payroll can be a confusing process for small businesses. Our payroll experts will ensure that your payroll is set up correctly from the beginning while helping you keep on top of your reporting. Please contact us today to see how we can help you simplify your payroll process.
