Single Touch Payroll (Phase 2)

The government has announced the expansion of Single Touch Payroll (STP) to include additional reporting information. This expansion is known as STP (Phase 2) with a mandatory start date for reporting from 1 January 2022.

The expansion of STP aims to reduce the reporting burden for employers who need to report information about their employees to multiple government agencies. It also supports the administration of the social security system.

Key changes

• Tax File Number (TFN): employee’s TFN declarations will no longer need to be sent to the ATO. However, they will still need to be kept on your business’ employee records.
• Employment basis: an employee’s engagement or work pattern will need to be reported to the ATO e.g., full time, part time, casual etc.
• Tax treatment: there are many factors that contribute to the amount of tax an employee pays which will be reported to the ATO through STP (Phase 2) each payrun e.g., if an employee has a Study Training Support Loan it will be included in the STP report.
• Cessation type: a reason for separation will need to be included in the STP report e.g., voluntary, redundancy, due to illness.
• Child support: deductions and garnishees will be reported.
• Income type: this will identify payments made to employees with specific tax consequences.
• Country codes: will be introduced to identify the home country of an employee if they are an inbound assignee or a working holiday maker, or the host country of an employee if they are an Australian resident working overseas.
• Disaggregation of gross earnings: STP (Phase 2) requires separate itemising of employee pay components e.g., bonuses, commissions, paid leave, overtime, directors fees etc.
• Salary sacrifice: employees salary sacrificed amounts will be included in the STP report.
• Lump sums: there will be changes on how lump sum payments are categorised in STP reporting.

As an STP enabled payroll solution provider, we are working closely with the ATO to ensure we continue to deliver an approved STP solution to our customers. If you are a customer of CloudPayroll you do not need to do anything. We will continue to offer STP reporting at the click of a button, however, we will communicate with you once we are fully STP (Phase 2) enabled.