Single Touch Payroll (STP) is a government initiative that sends tax and superannuation information from your payroll software to the Australian Taxation Office (ATO) as you prepare your payroll.

Phase 1 was rolled out from 1 July 2018 and the start date for Phase 2 is 1 January 2022.

STP Phase 2 aims to streamline the reporting obligations for employers and individuals and remove the need for manual reporting to other government agencies. 

The key changes to STP Phase 2 are:

• Disaggregation of gross income amounts

Your STP report currently includes a gross amount which is the total of many different components and payment types. As some of these are treated differently for social security purposes, you will now need to report them in more detail.

The additional information on income types will enable users to more flexibly:

• identify payments you make to your employees with specific tax consequences
• make it easier for them to complete their individual income tax return
• help the ATO identify where you are using a concessional reporting arrangement.

• Employment and taxation conditions

Employee employment and tax conditions, (such as employment basis, Tax File Number declaration information and termination details) are currently provided in different ways and on different forms. Phase 2 will streamline this process by including the information in your STP report.

• Country codes

If making payment to an Australian resident working overseas, there is a requirement to provide information relating to the host country.

• Child support garnishees and child support deductions

There will be the option to include child support garnishees and deductions in your STP report. This will reduce the need to give separate remittance advices to the Child Support Registrar.

• Reporting previous Business Management Software IDs and Payroll IDs

You may have the option to provide the ATO with previous Business Management Software IDs and Payroll IDs in your STP report. This might occur when you’ve changed your business structure or changed software and can’t zero out or finalise previous records.

Providing this information will help the ATO reduce and fix issues with duplicate income statements for employees in ATO online services.

The following information has been released for specific accounting software programs:

Xero

STP Phase 2 will not change the way businesses process pay runs or lodge STP through Xero.

Due to the additional reporting requirements, a review of Pay Items, employee details and business information will need to be undertaken.

Stage one: The first stage will start becoming available within Xero from later this month (April) onwards via a limited release before being rolled out over the following months. This will include updates to the way new employee records are set up in payroll.

Stage two: The second stage will begin rolling out within Xero in the new financial year. This will extend the set up process to enable the transition of existing employee payroll records to STP Phase 2 compliance.

Stage three: The final stage will be available in the second half of this year. It will see the new pay items and leave from STP Phase 2 finalised within Xero, with product support to review existing pay items and leave that may need to be changed to those stipulated by STP Phase 2.

Xero has been successful in receiving a 12 month deferral to be able to lodge the first STP Phase 2 pay run by 1 January 2023.

More information released by Xero can be found here:

Intuit QuickBooks (QBO)

QBO has implemented some updates into its payroll system in preparation to be STP Phase 2 compliant which has resulted in some reviews to be undertaken.

Users should look to review:

• pay category payment classification mapping
• leave category payment setup
• classifications to salary sacrificed deduction categories
• employment and taxation conditions.

QBO has received a deferral until 1 March 2022 to lodge the first STP Phase 2 pay run.

More detailed information released by QBO can be found here:

MYOB

MYOB has been successful in receiving a 12 month deferral to be able to lodge the first STP Phase 2 pay run by 1 January 2023.

AccountRight

Throughout 2022, you’ll be prompted in your AccountRight company file to make the move from STP Phase 1 to STP Phase 2.

At that time, your payroll details will be checked to ensure they meet the new STP requirements, and you’ll be notified if anything needs updating.

Nothing needs to be done yet, however, if you’d like to get a head start you can:

• check your business information
• check your employee information
• assign ATO reporting categories.

More information can be found here:

Essentials

Similar to AccountRight, Essentials will prompt you through the STP Phase 2 process as more information is released.

More information can be found here:

Business

MYOB Business will prompt you through the process of being STP compliant.

More information can be found here:

Reckon

Reckon customers will not need to adjust the way they manage payroll at the moment.

A software update will be formally released in the future which will include all updates to be STP Phase 2 compliant.

Reckon has been successful in receiving a 12 month deferral to be able to lodge the first STP Phase 2 pay run by 1 January 2023.

More information released by Reckon can be found here:

AFS has experts in each cloud accounting software who can help you be STP Phase 2 compliant. If you have any questions, or would like assistance preparing for STP Phase 2, please contact one of our specialists on 03 5443 0344 or email afs@afsbendigo.com.au.

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