Single Touch Payroll Phase 2
New Year brings on STP Phase 2!
Chances are, if you employ staff, you have heard all about Single Touch Payroll (STP). We continue to see this is a strong focus of the Australian Taxation Office (ATO), ensuring employers are staying compliant with their obligations and employees are not claiming Government benefits that they are not entitled to receive. The collection of this information in real time makes it easier for the ATO to direct their audit focus in areas they can see the information is not consistent, late, incorrect or not reported at all.
STP is now being expanded to include additional information and the mandatory start date of this is 1 January 2022.
What is changing?
Disaggregation of gross
Your STP report currently includes many different pay items into one gross amount. As Services Australia (which includes Centrelink, Medicare and Child Support) treats some of these items different you will now need to report more detail.
STP Phase 2 will require you to separately itemise the following components:
Gross
Paid leave
Allowances
Overtime
Bonuses and commissions
Director’s fees
Salary sacrifice
Child support garnishee/deduction amount
You will be able to avoid sending separate remittance advices to the Child Support Registrar should you elect to report child support deductions/garnishees by pay events. This is a voluntary option and not all STP compliant software providers will offer this functionality.
Shared information with Services Australia
The ATO will share the STP Phase 2 pay data with Services Australia to assist their customers when reporting their employment income.
Tax file number declarations
Collecting a TFN declaration from your employees will remain required, but you will no longer need to send these to the Australian Taxation Office (ATO). This data will be included in your STP reporting, along with the following information:
Employment basis
Tax treatment
Cessation date and reason (no more separation certificates required)
Income type and country code
You are now able to report to multiple income types throughout the year to your employees. In addition to salary and wages (formally known as individual non-business (INB) you can assign payments to:
CHP (closely held payees) – applies when the payee is directly related to the employer.
WHM (working holiday makers) – applies to temporary visitors to Australia who hold a Working holiday visa (subclass 417) or Work and holiday visa (subclass 462). If you make payments to working holiday makers, you must also provide information about their home country in the country code field.
SWP (seasonal worker programme) – applies to regional programmes for government-approved employers, administered by the Department of Employment, Skills, Small and Family Business.
VOL (voluntary agreement) – applies to contractors paid under a Voluntary agreement.
LAB (labour hire) – applies to payments by a business that arranges for persons to perform work or services, or performances, directly for clients of the entity. Income for contractors only – does not include employees. Employees of labour hire firms should be reported as the relevant income type, such as SAW.
OSP (other specified payments) – this is a limited income type that only applies to specified payments by regulation 27 of the Taxation Administration Regulations 2017
Removing split income statements from changing payroll systems
A single income statement can still occur for employees, even if your business changed from one payroll system to another part way through the year. The ATO will be able to link the payee ID from a previous payroll system to the payee ID generated by a new payroll system so that there is only one income statement reported for each employee.
What do I need to do?
You may be able to get a head start by starting to allocate ATO reporting categories within your STP compliant software. Employment Basis, Income Type and Country of origin and ATO reporting categories will be required to be updated.
At the time of writing further developments are occurring within these digital service providers (DSPs) to ensure they remain STP Phase 2 compliant. Should any DSPs require additional time to be ready past 1 January 2021 they will apply for a deferral with the ATO and will advise you that you are covered.
No penalties will apply for genuine mistakes for the first year.
Please contact your accountant should you have queries regarding STP Phase 2.
Source:
https://www.ato.gov.au/Business/Single-Touch-Payroll/Expanding-Single-Touch-Payroll-(Phase-2)/
https://help.myob.com/wiki/display/ar/Getting+ready+for+STP+Phase+2