Single Touch Payroll Phase 2

Single Touch Payroll (STP) works by sending tax and super information from your STP-enabled payroll or accounting solution to the ATO as you run your payroll.

In the 2019–20 Budget, the Australian Government announced that STP would be expanded to include additional information.

The expansion of STP, also known as STP Phase 2 (STP2), will require all employers to report additional information through STP on or before each payday. This information will include details such as income or payment type and the reason for any cessation of employment.

STP2 reporting changes have been implemented to support the administration of Australia’s social security system. More information about employee earnings will be shared with Services Australia (Centrelink) through the additional information the ATO receives through STP2.

Australian businesses that have employees on their payroll will be impacted by this change, which is not just a software upgrade.

Impact on Employers

STP2 will mainly impact employers with arm’s length employees whose pay is made up of various payroll categories (e.g. allowances, overtime, bonuses etc.). We anticipate the impact on employers with closely-held employees (i.e. spousal employees only) to be minimal.

Implementing STP2 will still require a detailed review of software payroll settings and updates to same, which is likely to be time consuming.

For example, in relation to allowances, new payroll categories are required to be setup to include more detail regarding the type of allowance and calculation method. In relation to car allowances, there are five (5) separate pay items, including four (4) relating to the cents per kilometre calculation method.

The ATO will use the STP2 information to streamline employer interactions. This includes eliminating the requirement to lodge new employees’ TFN declarations and provision of separation certificates when employees leave.

Employers can also voluntarily report child support deductions and/or garnishees through STP2 which reduces the need to send separate remittance advices to the Child Support Registrar.

Commencement Date

The commencement date for STP2 reporting was 1 January 2022 (deferred previously from 1 July 2021) with an automatic deferral to 1 March 2022.

The three (3) main software providers have commencement dates as follows:

Other software providers will be advising clients if a deferral is in place or not. If you do not use one of the main software providers, we suggest you contact your provider for more information.

Applications to defer the STP2 start date at an employer level can be submitted also, which we can attend to on behalf of our clients.

How can AMG help?

It is the intention of AMG to help our clients implement the STP2 reporting changes over the course of this calendar year.

As part of this process, our staff will be undertaking comprehensive training in order to assist our clients with the transition now and into the future.

We shall touch base with impacted clients in due course, with a focus on clients who will have a reporting obligation from 1 March 2022.

Further Assistance

Feel free to contact our office for further details about STP2.

You can also visit the ATO website for more information about STP2.