July 2021 marked two years since the introduction of Single Touch Payroll (STP). The Australian government initiative has been well received by most as it enables a streamlined process of reporting tax and superannuation information to the Australian Tax Office (ATO).
Employers reporting process is further being streamlined with a STP expansion known as STP Phase 2.
While the mandatory start date for STP Phase 2 reporting is 1 January 2022, it is important to grasp an understanding of the changes before then to ensure your business is ready. Read below to learn more regarding some key changes when STP Phase 2 begins including:
- Changes to Employment Conditions Reporting with STP Phase 2
- Changes to Child Support Garnishees and Child Support Deductions Reporting with STP Phase 2
- The introduction of income type reporting with STP Phase 2
- The introduction of country codes reporting with STP Phase 2
- Where can I learn more about the introduction of STP Phase 2
Changes to Employment Conditions Reporting with STP Phase 2
The introduction of STP Phase 2 will require extra information regarding employee’s employment basis, tax treatment and ceasing of employment to be included in STP reporting. Employment basis refers to the work pattern or engagement relationship of the employee such as are they full time, part time or casual. Regarding tax treatment, by reporting some additional information each time an employee is paid, the ATO will be able to identify the factors that influenced how you calculated the pay as you go withholding for that employee. When an employee ceases employment, you will need to provide a reason for them ceasing in your STP report. This will eliminate the need for an employer to provide a separation certificate. STP Phase 2 will also eliminate the need for employers to send the ATO employers tax file number declarations however, they will still need to be keep on an employee’s record.
Changes to Child Support Garnishees and Child Support Deductions Reporting with STP Phase 2
Child support garnishees and child support deductions will be an optional inclusion in a STP report once Phase 2 is introduced. This will further streamline reporting by reducing the need for separate remittance advice reporting to Child Support.
The introduction of income type reporting with STP Phase 2
The introduction of reporting income types should simplify the process of employees completing their annual tax return post STP Phase 2. These additions will identify payments that you, as their employer, make to your employees with specific tax consequences plus help the ATO identify where you, as their employer, are using a concessional reporting arrangement.
The introduction of country codes reporting with STP Phase 2
Another introduction will be the reporting of country codes regarding an employee’s home country if they are either an inbound assignee or a working holiday maker. The country code will also be reported for the host country of an employee who is an Australian resident working overseas.
Where can I learn more about the introduction of STP Phase 2
The ATO is currently working with digital service providers to update their STP enabled software after which your digital provider should contact you to advise what action to take. As an employer what you will have to do will be determined by the product you use and how your business manages their payroll.
To find out more about Single Touch Payroll, visit ato.gov.au/stp
Bookkeeping Matters empower small to medium sized businesses to focus on their passion, while we take care of their financials
Bookkeeping Matters will be assisting our clients to manage and implement the upcoming changes with the introduction of STP Phase 2.
We are in business because we’re driven to see yours succeed. We genuinely want the best for you and will go above and beyond to bring order to your finances, so you can spend time on the things that matter most.
Find out more about how we can help you by calling June on 0423 003 552.
Disclaimer: The information in this article is general information only