Single Touch Payroll (STP) Phase 2

Single Touch Payroll Phase 2

The next phase of Single Touch Payroll (STP phase 2) is coming!

The goal of the next phase will be to include additional details being provided to the Australian Tax Office (ATO) with the aim to reduce reporting burdens for employers who report to multiple government agencies.

Right now, foundU customers may like to keep on top of the updates but there is no action required just yet.

Update as of November 2021

While the official start for Phase 2 reporting is 1 January 2022, the ATO has allowed providers like foundU to defer its implementation to give all parties enough time to make this transition.

foundU’s STP deferral application has been approved until October 1 2022. 

 

We will provide you with regular updates throughout this deferral phase, so don't worry, you won't have to do much except keep an eye out for our emails or blog posts!

We’ll communicate as soon as these changes are available so you’re prepared throughout the transition.

If you want to know more about the Key Changes coming read on!

Key Changes

What is Changing?

Below we have summarised some of the Key changes as provided by the ATO. Most of the additional information you need to report should already be captured in foundU, and we will let you know the changes that we implement within your platform as updates become available.

There will be changes to the way you report:

  • Employment and taxation conditions
  • Child support garnishees and Child support deductions
  • Reporting previous Business Management Software IDs and Payroll IDs
  • Disaggregation of gross
  • Amounts paid to staff - instead of reporting a single gross amount, you'll separately show items such as overtime, paid leave, bonuses and commissions.
  • Income types - you'll include information such as whether a payment is regular salary and wages or income for working holiday makers.
  • Employment conditions - you'll provide some additional information such as whether your employee is full-time, part-time or casual, and if they leave, the reason they stop working with you.
  • Country codes- Sometimes you'll need to report a country code. For example, if you make a payment to an Australian resident working overseas, you'll need to provide information about the host country.

Reporting Employment and Taxation

There are many factors to help you work out the correct amount to withhold from your employees’ pay. These may be based on information they provide in their TFN declaration or withholding declaration, or their employment information.

With STP Phase 2, you must now report this information in each STP report, reflecting any changes to  their employment basis.

These include:

  • Their employment basis
  • The information on their TFN declaration
  • Details of when and why they leave.

For more information on what this reporting will look like when STP Phase 2 begins- How to report employment and taxation information through STP Phase 2

Reporting on Income types


You already tell the ATO about the type of income your employees receive in your STP report.

The reporting of income types is being introduced in Phase 2 to more flexibly:

  1. Identify payments you make to your employees with specific tax consequences.
  2. Make it easier for them to complete their individual income tax return.
  3. Help identify where you are using a concessional reporting arrangement.

There are some things you can do now to prepare, such as:

  • Review the STP Phase 2 employer reporting guidelines
  • Consider how some of the information you already report through STP is changing
  • Find out what new information you'll need to report and consider where you capture and store some of this information now, if it's not in your payroll system
  • Review your business and payroll processes, and plan for how and when you'll need to do this.
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