The ATO has announced the next phase of changes to Single Touch Payroll (STP).
Single Touch Payroll (STP) Phase 2 will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies. It will also help Services Australia’s customers, who may be your employees, get the right payment at the right time.
What is the difference between STP Phase 1 and 2?
In STP Phase 1, you reported a single gross amount which was made up of several different payment types. In STP Phase 2, many of these need to be separately reported.
Why does the ATO want the gross income information reported separately?
Why does the ATO want to know the disaggregated income?
Different components of pay are treated differently by various laws – for example, overtime is treated differently for superannuation guarantee purposes, whereas some kinds of leave are treated differently by Services Australia when determining an individual’s entitlements within the social security system. Reporting the disaggregated income means these components can be identified and treated correctly.
Things you can do to prepare for STP Phase 2 reporting
- Find out when your DSP will be ready for STP Phase 2 reporting
- Know your required start date
- Consider if you need more time to make the transition
- Check if you need to make any changes to your payroll
- Review your allowances
STP Phase 2 started on 1 January 2022. Some Digital Service Providers (DSPs) needed more time to update their products and transition their customers. If your DSP has a deferral, this covers you.
It’s important you understand which of the following circumstances apply to you:
- Your payroll product is ready – it’s time for you to start STP Phase 2 reporting now or have a plan in place to transition as soon as possible.
- You are covered by your DSPs deferral – make sure you understand when your product will be ready and that you are ready to start Phase 2 reporting when it has been updated, or no later than the first pay day after your DSP deferral expires.
- The product you’re using is not being updated to offer STP Phase 2 reporting – your DSP will let you know if they have another product you can use. If not, you’ll need to choose a product that offers STP Phase 2 reporting.
If you’re not sure which of these circumstances applies to you, you need to speak with your DSP and/or contact your accountant who should be able to provide this information to you, or point you in the right direction.
What you need to do for STP Phase 2 reporting
You need to start reporting the additional information when your product is ready, so you should start preparing now.
Many DSPs are releasing changes progressively. Your DSP will provide you with instructions and it’s important that you follow them.
The ATO has resources to help you to understand the changes and prepare. These include:
- a factsheet outlining the key changes of STP Phase 2 reporting
- a checklist to consider what you need to do
- detailed reporting guidelines which outline the STP Phase 2 reporting requirements.
You can access these and other resources at ato.gov.au/STPresources