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Key changes being introduced under the Single Touch Payroll Phase 2 regime have now been detailed by the ATO, including categories of payments that employers will now need to report.
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Tax Office outlines STP Phase 2 changes
23 March 2021
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Mandatory STP Phase 2 reporting is now set to commence from 1 January 2022, as the government looks to reduce the reporting burden for employers who are currently required to provide employee information to multiple government agencies.
The expansion of STP will see additional information required to be reported each payday, building on basic salaries and wages information reported through the original STP regime that first began in 2018.
The Tax Office has now released a fact sheet for employers, noting that STP reports will soon need to separately itemise the components which make up the gross amount, including bonuses and commissions, directors fees, paid leave, salary sacrifice, overtime, allowances and gross (other).
Employers will also need to report whether an employee is on a full-time, part-time or casual employment basis, the tax treatment for PAYG purposes, and the reason for separation when employees leave.
Income types and country codes will also need to be reported to make it easier for employees to complete their individual income tax returns.
Salary-sacrificed amounts will also need to be included in an STP report, while lump-sum payments will be broken down into two different categories.
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Employers will also be able to provide the ATO with previous Business Management Software IDs and Payroll IDs where there has been a change in software or business structure to allow the Tax Office to fix issues with duplicate income statements for employees in ATO online.
‘Nothing you need to do right now’
Employers and practitioners have been advised that there is nothing they need to do at the moment as the ATO works with software providers to update their STP-enabled software.
“It’s important to remember that all STP-enabled solutions have different functions and updates for the expansion will be offered in different ways,” the ATO said.
“What you need to do to set up will depend on what product you use and how you manage your payroll.”
The Institute of Certified Bookkeepers executive director Matthew Addison, who co-chairs the ATO’s Tax Practitioner Stewardship Group, has assured practitioners that transitional arrangements will be introduced in the build-up to the 1 January 2022 deadline.
“What I’m hearing from the ATO is a really good approach of going, ‘We’re talking to the software companies, we’ll get their implementation date and we’re going to allow all their clients X number of months after the launch date’,” Mr Addison said.
“That’s really good because that means we don’t have to go and apply for every one of our clients to get a deferral with an implementation time frame.
“It’s Christmas, it’s January; the world shuts down for January, but it’s not a cold, hard cut-off [date].”
View the ATO’s latest guidance and fact sheet on STP Phase 2 here.
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