Single Touch Payroll Phase 2
The Australian Tax Office expansion of Single Touch Payroll (STP Phase 2), aims to reduce the reporting burden for employers who are required to report information to multiple government agencies and better support the administration of Australia’s social security system.
Every business that employs staff is required to comply with the expanded program.
What are the changes to Single Touch Payroll?
- Reporting of Payroll Information to Services Australia
Services Australia, which is responsible for delivering government payments, will receive data that is reported through the STP Phase 2 channel along with the ATO.
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Disaggregation of Gross Earnings
Previously reported as a single figure, gross earnings will be split into the following categories:
– All taxable allowances
– Bonuses and commissions
– Directors’ fees
– Paid leave
– Salary sacrifice
– Overtime
– All other gross payments
- Income Stream and Tax Treatment Codes Replace Payment Summary Type
Phase 2 introduces an entirely new reporting payload that no longer relies on the concept of a payment summary type. Instead, earnings will be reported under what is called an income stream, which represents a unique source of income for a payee.
- Updating TFN Declaration Details
Changes to TFN declaration information can be updated in subsequent reports once the initial TFN declaration information has been reported.
- Lump Sum E Year
The prior year to which Lump Sum E payments correspond will be reported through STP so that employers will no longer be obligated to issue Lump Sum E letters to payees at the end of a financial year.
What does this mean for staffing agenices?
The process of submitting STP reports will not change at all; only the data and the structure of the data that is reported will change.
However, because of the disaggregation of gross earnings and the fact that STP data will be reported directly to Services Australia, any payroll errors could have a much more immediate impact on, for example, a payee’s eligibility for benefits such as income support.
Therefore, it will be more important than ever for agencies to ensure that they are paying payees correctly. That means paying the correct amounts but also classifying the payments correctly (i.e. ensuring payment against the correct pay code types).
What FastTrack is doing to support clients?
Although the official start date for Phase 2 reporting is 1 January 2022, FastTrack has secured a 12-month deferral for all customers until 31 December 2022.
We will communicate the impacts STP Phase 2 has on the configuration of FastTrack360 along with the release plans to support this change once they are locked down, around mid-2022. All customers will be required to upgrade to STP Phase 2 in line with the FastTracks360 rollout strategy in late 2022.