What is Single Touch Payroll Phase 2?
In the 2019-20 Budget, the Federal Government announced that they would be expanding Single Touch Payroll (STP).
This expansion, known as STP Phase 2, aims to reduce the reporting burden on employers that need to report information about their employees to multiple government agencies.
STP Phase 2 will also help Services Australia issue the correct payment to their customers who may also be your employees.
During this blog, we outline 4 important aspects of Single Touch Payroll Phase 2.
1: STP Phase 2 benefits for EMPLOYERS
STP Phase 2 aims to streamline the interactions that employers have with the ATO.
Some examples of this include:
- You don’t need to send TFN declarations separately to the ATO anymore because STP Phase 2 includes the necessary information.
- The ATO will be notified of concessional reporting options through ‘Income Types’ in STP Phase 2.
- If you make a Lump Sum E Payment, you don’t need to provide a Lump Sum E Letter to your employee. Instead, include the amount and period in your reporting.
- When an employee stops working for you, you don’t need to separately send separation certificates to the ATO. Report the termination date and reason through STP Phase 2.
- You can choose to report child support deductions and garnishees through STP Phase 2, and won’t need to report them separately to the Child Support Registrar if you do.
The ATO will also share the information you report through STP Phase 2 to Services Australia.
2: STP Phase 2 benefits for EMPLOYEES
STP Phase 2 should also streamline the interactions that employees have with the ATO.
- Employees will have better visibility at tax time.
- They’ll get a breakdown of the different types of income they received and where to put it on their tax return.
- This will help them know if their employer is withholding the correct amount of taxes, so they don’t end up owing too much at tax time.
The information will also be shared with Services Australia to streamline the interactions that they have with their customers.
3: What isn’t changing under STP Phase 2
While you need to report more information about your employees, your existing reporting and payroll processes will stay the same.
The following will not change under STP Phase 2:
- The way you report.
- Reporting due dates.
- The types of payments you make.
- Tax and super obligations.
- EOFY reporting and finalisation requirements.
4: KEY CHANGES to Single Touch Payroll Phase 2
Disaggregation of Gross
In the previous phase of STP, your payroll software reported a single gross amount that included various payment types and components.
Under STP Phase 2, these will be reported separately for different social security treatments. However, this won’t change how you input payments into your payroll software or run payroll.
Employment and Taxation Conditions
To simplify employment and taxation reporting, you’ll need to include more information about your employees in your STP Phase 2 reports. This includes their employment basis (full-time, part-time, casual), TFN declaration information, and their departure date and reason.
You may have already provided this information through other forms of reporting, such as TFN declarations and employment separation certificates.
STP already sends some details about an employee’s income, but STP Phase 2 introduces reporting of income types to better:
- Identify payments with specific tax consequences for employees.
- Help employees complete their tax returns more easily.
- Help the ATO know when employers use concessional reporting, such as with closely held payees.
Child Support Deductions & Garnishees
STP Phase 2 allows you to report child support deductions and garnishments. If you decide to report this information through STP, you won’t need to provide a separate report to the Child Support Registrar. However, keep in mind that it’s not required to report this information through STP.
To learn more contact our team on (03) 9374 8400 or email us. We are here to help:
(03) 9374 8400
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