The Australian Tax Office (ATO) recently hosted a webinar introducing details of the Single Touch Payroll (STP) expansion to the Australian public. This hour and a half webinar was aimed largely towards payroll professionals and accountants, and we’ve summarised the main points of interest below:
What is Single Touch Payroll Expansion (Phase 2)?
The ATO has emphasised that this most recent update to Single Touch Payroll is to assist in reduced reporting requirements to different government agencies. Permitting all relevant information to be reported through the payroll system and allowing agencies to collect this information direct from the ATO.
One of the primary examples of this information sharing between agencies is with Services Australia, allowing Services Australia to confirm child support deductions without a separate report to be required.
What’s new with the Single Touch Payroll Expansion?
The end of Tax File Declaration Lodgements
With STP (Phase 2), the ATO will also expect information on employee Tax Treatment at each pay run.
The ATO have said that this will mean they no longer expect employers to lodge Tax File Declarations (however the completion of a Tax File Declaration is still required by new employees).
Additional employment conditions
STP lodgements will now include information around your employee’s employment basis, if they are full-time, part-time or casual. In addition, on cessation of employment the reason for termination will also be included as part of the lodgement.
Further definitions around allowances and other earnings
Previously in payment summaries and STP (Phase 1), most employee earnings were grouped into one ‘gross earnings’ bucket, including most allowances.
Moving forward with STP (Phase 2) the STP lodgements will be required to separate out all earnings into the following discrete payment types:
- Bonuses and commissions;
- Directors fees;
- Paid leave;
- Salary sacrifice;
- Allowances – all allowances will be need reported separately in STP (Phase 2);
- Gross (other).
As part of the change in salary sacrifice super contributions (in January 2020), employers will now be expected to report all salary sacrifice as part of STP (Phase 2).
When is the Single Touch Expansion to Start?
The ATO have announced that STP (Phase 2) reporting requirements will become mandatory on 1st of January 2022 for all employers. For the time being there is nothing that employers will need to do right now.
The ATO are working closely with payroll digital service providers to ensure that the technology is working in the background, so be sure to keep an eye on any updates by your payroll service providers for updates to their STP closer to 2022.
The ATO have advised that they will be working with both payroll service providers and employers for any exemptions to STP (Phase 2) on a case-by-case basis. These exemptions will mean that the additional reporting requirements for Phase 2 are not applicable for your business but does not exempt your business from STP (Phase 1) reporting requirements.
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Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.