Business Growth Hub

Are You Ready For Single Touch Payroll (STP) Phase 2

Written by Growth iQ | Sep 28, 2022 3:46:44 AM

The ATO introduced Phase 2 of the Single Touch Payroll (STP2) reporting regime earlier this year. Depending on your accounting software provider, you will be required to make the switch in the coming months. This is mandatory to all employers who pay wages and must be actioned as soon as possible.

 

What Does This Mean For Your Business?

The aim of STP2 is to reduce your reporting workload if you currently report to multiple government agencies and support the administration of Services Australia. This comes with a number of new responsibilities and benefits for your business. Ultimately, allowing for more accurate reporting and less repetition in reporting, as the ATO will already have a lot of the information they require on file.

 

Key Changes

Employers must now report:

  • A TFN or ABN for each payee (or a valid exemption code)
  • Employee or contractor commencement date
  • Employee or contractor cessation date and reason for cessation
  • Employment basis (Full time, Part-time, Casual, etc)
  • Tax treatment – using the codes supplied in your STP solution
  • Income types – to be assigned to each payment made to employees

STP2 requires that payments be reported separately as:

  • Gross
  • Paid leave
  • Allowances
  • Overtime
  • Bonuses and commissions
  • Directors’ fees
  • Lump sum return to work payments, and
  • Salary sacrifice payments.

You must also report:

  • Exempt foreign employment income
  • Unused leave and employee termination payments
  • Child support garnishees and child support deductions

What Do You Need To Do Now?

Spend some time familiarising yourself with the changes coming into effect and what will be required from your end. We can also assist with any questions you may have in regard to how this will affect your business.

Due to the complex nature of setting up STP2, we highly recommend that you do it the right way from the start. Mistakes made in the set-up process can be costly and take a long time to fix. Our highly experienced Bookkeeping Managers, Alison and Amanda, can complete this set-up for you and ensure you meet your STP2 obligations. Contact us to book a suitable time to discuss making the switch.

For further information:

XERO

 - Australian Taxation Office 

- Service Australia