Single Touch Payroll (STP) Phase 2
The Australian government mandated the start of the Single Touch Payroll (STP) Phase 2 to commence 1st January 2022. The main objective is to reduce the burden for employers of reporting employee information to various government agencies. It will also help ensure employees receive correct payment on time.
The STP Phase 2 will input employees’ tax and super information when payroll is run through an STP enabled payroll software. This information includes:
- type of income, such as salary and wages, or
- type of employment, such as working holiday maker, and
- components of the payments, which includes gross pay, paid leave, overtime or allowances.
How do employees benefit?
The STP Phase 2 will benefit employees in a number of ways including the following.
- Employee tax returns will have more pre-filled information on the types of income earned.
- Service Australia will have prefilled information for claims and reports decreasing the amount of documentation required.
- Improvements in family tax benefit processes will enable SMS and email messages to provide information on, for example, change in employment, family income estimates being too low or starting a new job.
- Providing analysis of income and employment history for any employees required to pay a debt to Service Australia.
How do employers benefit?
STP Phase 2 will benefit employers in various ways as employers will no longer need to do the following.
- Report their employees’ details to various organisations.
- Provide employees’ TFN declarations to the ATO. Employees will provide this and it will be kept in the employee records.
- Provide Lump Sum E letters to the employee while making payment. Types of employment will have already been stated through STP
- Send separate remittance advices to the Child Support Registrar. Child support deductions and/or garnishees voluntarily can be reported through STP.
Other advantages for employers include that:
- STP Phase 2 can report changes in employee’s information. As a result duplicate income statements for employees in the ATO online services, myGov.
- STP Phase 2 reporting will record the date and reason an employee leaves. This means termination certificates won’t need to be issued.
While STP Phase 2 will allow the reporting of additional information through the STP report, some things remain unchanged including:
- the way information is lodged,
- the due date,
- the types of payments that are needed,
- tax and super obligations and
- end of year finalisation requirements.
The key changes to STP Phase 2 include disaggregation of information such as:
- gross, employment and taxation conditions and income types,
- country codes,
- child support garnishees and child support deductions and
- reporting previous business management software IDs and Payroll IDs.
With the new changes the payroll function is expected to be easier and more efficient for all the parties involved. If you would like more information contact us today to book your free discovery session
Source: www.ato.gov.au