The expansion of STP also referred to as STP Phase 2 (Single Touch Payroll) will be mandatory January 1st 2022. So what does this mean for employers? In short, there’s not a lot that needs to be done right now. The ATO are working with software providers who will update their STP-enabled software to comply with the reporting changes in STP Phase 2.
You will no longer need to send the ATO Tax File Declarations as the information they require will be included in the STP report. This information will include;
- Employment basis – whether the employee is full-time, part-time or casual.
- Tax treatment – Identifying factors in how you calculated tax for example, whether or not the employee has notified you they have a Study Training Support loan.
- Information where the employee ceases employment. This will reduce the need for you to supply separation certificates.
- Cessation type – you will need to provide a reason for the separation i.e: if it was due to illness, voluntary or redundancy.
- You will also have the option to include Child support garnishees and Child support deductions in the STP report.
- Income Type and Country Code – this is being introduced to identify payments you make to employees with specific tax consequences and to make it easier for them to complete their individual income tax returns. The home country codes of employees will be included.
- Disaggregation of gross – The STP report will separately itemise the components that make up the gross amount by payment types including; bonuses and commissions, directors fees, paid leave, salary sacrifice, overtime, allowances, gross(other). All allowances will need to be reported separately not just expense allowances deductible on your employees individual tax return.
- Salary Sacrifice – from January 1st, salary sacrifice contributions can no longer be used to reduce ordinary time earnings or count towards your minimum superannuation obligations. Salary sacrificed amounts will need to be reported in the STP report.
- Lump Sum E – a financial year indicator has been added which will eliminate the need for you to provide lump sum E letters in most cases.
- Lump Sum W – the return to work payment that occurs in extremely limited circumstances and is taxed concessionally (formerly reported in STP under Payee Gross) is now separately itemised under this new label.
- Reporting previous Business Management Software IDs and Payroll IDs – If you change business structure or change software this will allow matching between systems which will reduce issues and duplicate income statements for employees.
What’s not changing?
- The way you submit your STP report
- STP reports are still due on the payday unless you are eligible for a reporting concession
- The types of payments that are in-scope for STP reporting
- Taxation and superannuation obligations
- End of year finalisation requirements