The Australian Taxation Office [“ATO”] have expanded the Single Touch Payroll [“STP”] reporting rules into Phase 2.
STP Phase 2 aims at providing further transparency around different components of employee pay. Generally speaking, different components of pay are treated differently by various laws. For example, overtime is treated differently for superannuation guarantee purposes, whereas some kinds of leave are treated differently by Services Australia when determining an individual’s entitlements within government agencies.
Disaggregating the components of pay separately means these components can be identified and treated correctly.
Every business that employs staff is required to comply with STP Phase 2, here are some of the main changes of STP Phase 2:
1. Tax file number declaration details
You will need to report employee tax information through STP reporting, eliminating the need to separately submit tax file declarations to the ATO; any changes to employee tax information will be automatically reported through STP as well.
2. Termination reason
You will need to report the reason for any employee termination through STP reporting.
3. Allowances
You will need to report any allowances through STP reporting such as car, laundry, meal, travel and accommodation allowances.
4. Bonuses and commissions
Any bonus or commission payments ordinarily paid as a lump sum (say at the end of the financial year), will now need to be reported through STP reporting.
5. Directors’ fees
You will need to separately include any Directors’ fees in your STP reporting.
6. Lump sum payments
You will need to report any lump sum return to work payments or back pay from prior years in your STP reporting.
When did it start?
Although the official start date for STP Phase 2 reporting was 1 January 2022, most payroll software providers secured deferrals. For example, MYOB customers had a deferral in place until 1 January 2023 and Xero customers have a deferral in place until 31 March 2023.
What do you need to do?
Depending on your payroll software transitioning to STP Phase 2 generally requires you to review your employee records and the way they have been set up for payroll to ensure they have more detail on the components that make up their pay.
Payroll information is complex so we suggest you contact us on 1800 855 844, and we can assist you to transition to STP Phase 2 and report your payroll in accordance with the new rules.
