Single Touch Payroll Phase 2 is an expansion of the Australian Tax Office’s payroll reporting system that will mean employers will be required to report additional information to the ATO and clarify payments made to employees.
Key to STP 2 is the sharing of payroll data with multiple government departments, including Services Australia and the Child Support Agency amongst others. By streamlining the information through the payroll system, the administrative burden on employers will be reduced.
STP 2 is mandatory for all businesses, it is not optional.
STP 2 went live on 1 January 2022 however the ability to implement the change has been driven by the readiness of software providers that many of us utilise. These companies have blanket deferrals as follows:
- Xero has a blanket deferral to comply till 31 December 2022.
- MYOB also has a deferral to comply till 1 January 2023.
If you are using an alternate system, please check with your provider as to your cut-off date for implementation.
What you will need to report
For many, a single gross amount is reported, however STP 2 requires that employers separately report the following:
- gross
- paid leave
- allowances
- overtime
- bonuses and commissions
- directors’ fees
- lump sum – Return to Work
- salary sacrifice.
This breakdown of amounts is now referred to as “disaggregation of gross” and must occur to remain compliant. For more detailed information from the ATO, CLICK HERE.
Important to note that while many employers have an all-inclusive rate of payment that includes allowances such as their Industry Allowance or Tool Allowance, this all now needs to be broken down and each element reported separately for every employee individually.
We highly recommend that you speak with your accountant or bookkeeper to be certain your payroll setup and reporting is established correctly and is compliant with ATO requirements. You should also communicate with your employees as to the changes they will see on their pay slips and when this will commence.
One more thing….
A reminder that the new Award rates apply from 1 July and will also need to be entered into your system. And don’t forget the increase to Superannuation which will now sit at 10.5% along with the removal of the $450 lower income threshold which will expand coverage of the super guarantee to all employees over 18 regardless of what they earn each month.
Please contact the HR Staff n’ Stuff team if you need further assistance.
