1. What is Single Touch Payroll Phase 2
Single Touch Payroll (“STP”), is an Australian Government initiative to reduce employers' reporting burdens to government agencies. With STP, you report employees' payroll information to Australian Tax Office (“ATO”) us each time you pay them through STP-enabled software. Payroll information includes salaries and wages pay as you go (“PAYG”) withholding and superannuation.
The expansion of STP, or STP Phase 2, significantly increases the data required to be reported to the ATO. It is hoped that this additional reporting will assist in ensuring employees are paid correctly as well as reducing the need for employers to report information about employees to multiple government agencies.
2. Single Touch Payroll Stage 1 to Stage 2 conversion
STP started on 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or fewer employees and is a mandatory obligation. And the mandatory start date for Phase 2 reporting is 1 January 2022.
3. Benefits of STP Stage 2
Employers’ benefits
- Do not need to send employee's TFN statement to ATO.
- Tell ATO by declaring the type of income, if employers use a preferential declaration, such as for closely held payees or inbound transferees.
- Employers will not need to provide your employee with a lump sum E if they make a lump sum E payment.
- Tell ATO the solution if employers change their software or employee's payroll ID.
- Employers may no longer need to provide proof of separation when their employee leaves.
- Make it easier for employees to file their tax returns.
- Over time, the information in the new report will enable ATO to tell employees that if they provide incorrect information to their employer, it may result in them receiving a tax bill.
- ATO will also share STP information with the Service Australia so they can streamline their interactions with customers.
Employers’ Digital Service Provider (“DSP”) which seeks to protect Taxation, Accounting, Payroll and Superannuation related data and the integrity of the Taxation, Business Registry and Superannuation systems that support the Australian community will update its STP-enabled software to provide Stage 2 reporting. When your STP-enabled solution is ready, your DSP will let you know what you need to do. You can now do several preparatory tasks, such as.
(1) Review the STP Stage 2 employer reporting guidelines.
(2) Consider how some of the information you have already reported through the STP has changed.
(3) Identify any new information you need to report and consider where you should access and store this information if it is not in your payroll system.
(4) Review your business and payroll processes and plan how and when you need to do this.
Chang Accounting Advisory Pty Ltd, we are CPA practice and tax agent. We provide STP software consultation, set up and management for business. If you or your families or friends need our STP services, please feel free to contact our team for any assistance.
This article is for informational purposes only and does not form part of our advice. This article is based on ATO Australia guidelines. Please contact our team if you need any assistance.
Claire Chang, 0497 131 419, claire.chang@changadvisory.com.au, WeChat: clairechang26
Michelle Cui, 0433 539 870, michelle.cui@changadvisory.com.au, WeChat: michellejc
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Claire Chang