If you're running payroll in Australia, staying up to date with your Single Touch Payroll (STP) obligations is essential. STP Phase 2 represents a major step forward in simplifying employer reporting while giving government agencies better visibility over workforce and income data. Here’s what you need to know about STP Phase 2 and how CloudPayroll makes the transition seamless.
The Australian Taxation Office (ATO) introduced STP to streamline payroll reporting and reduce the administrative burden on employers. STP Phase 1 required employers to report basic payroll information, including wages, PAYG withholding, and super, each pay cycle.
STP Phase 2 builds on this by asking for more detail in your payroll reporting. The goal is to improve data sharing between the ATO and other agencies like Services Australia, reducing the need for employers to provide the same information multiple times.
The good news, if you're using CloudPayroll, you're already covered. Our platform is STP Phase 2 compliant, helping businesses of all sizes stay on the right side of the rules with minimal effort.
With Phase 2, employers now report more detailed information to the ATO. Here's what’s changed:
Instead of reporting a single gross amount, you now break down earnings into categories, such as bonuses, overtime, allowances, and paid leave. This change helps government agencies interpret payments more accurately.
You no longer need to send separate Tax File Number declarations to the ATO. This information is now included in your STP report. Employers still need to collect and retain a signed declaration, but you can easily store it on CloudPayroll’s document management feature under each employee’s digital record.
You now report the employment basis (e.g. full-time, part-time, casual) and the income type (e.g. salary and wages, working holiday maker, closely held payee). This change gives agencies a clearer view of their workforce makeup.
When an employee leaves, you must report the reason for termination through STP (e.g. resignation, redundancy, dismissal). This change streamlines claims with Services Australia and other departments.
You can now report child support deductions through STP. This process is optional, but it helps simplify compliance for employers who handle child support payments.
CloudPayroll received an official deferral from the ATO until 31 May 2022, allowing time to implement the new requirements. Since then, we've fully transitioned our clients to STP Phase 2.
Employers using CloudPayroll experienced a seamless transition, updates were implemented automatically with no action required. We guided users through the changes via Dashboard notifications and comprehensive support materials. For new CloudPayroll customers, STP Phase 2 compliance is fully integrated into the onboarding process from day one.
Adopting STP Phase 2 through CloudPayroll not only meet compliance requirements but also unlocked real benefits for businesses and their teams.
In short, STP Phase 2 makes it easier to manage compliance while improving the accuracy and accessibility of employment data across the board.
Already a CloudPayroll customer? You're covered for STP Phase 2. New to our solution? We’re ready to help you get compliant quickly and easily.
Want to see how it works? Start your free demo today.
