Expanded STP Reporting Requirements For Employers

The ATO has recently announced that from the 1st January 2022, employers will be required to provide additional Single Touch Payroll (STP) information. This will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies.

But what does this mean for you? If you currently employ people, please read on to learn more!

WHAT IS STP?

Single Touch Payroll (STP), is an Australian Government initiative to reduce employers' reporting burdens to government agencies. With STP, you report employees' payroll information to the ATO each time you pay them through STP-enabled software. Payroll information includes:

• salaries and wages

• pay as you go (PAYG) withholding

• superannuation.

If you haven't started reporting through STP, you need to start reporting as soon as possible as penalties may apply!

WHAT IS STP PHASE 2?

The expansion of STP, also known as STP Phase 2, changes reporting requirements for employers when it comes to what information they give to the ATO regarding their payroll. The changes will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies. The mandatory start date for Phase 2 reporting is 1 January 2022.

WHAT ARE THE MAIN CHANGES?

• Tax File Number Declarations - Information collected from TFN declarations – including the TFN itself, employment type and whether the employee has a HECS-HELP debt – will be included in the STP report and the declaration itself will no longer need to be sent to the ATO.

• Employee Separation Certificates - These certificates will no longer be required as the reason why an employee has left the business will now be provided via the STP report.

• Lump Sum E payments - Previously, if an employer makes a payment owing from previous years a Lump Sum E letter would need to be provided to the employee. This information must now be included in Phase 2 reporting, with details of the payment appearing in the employee’s income statement.

• Child Support - Businesses will have the option to include child support garnishees and deductions in their STP report, reducing the need to provide separate advice to the Child Support Registrar.

WHAT DO YOU NEED TO DO?

The ATO is working closely with digital service providers who will update their STP-enabled software to offer Phase 2 reporting. When your STP-enabled solution is ready, your DSP will let you know what you need to do.

There are some things you can do now to prepare, such as:

• review the STP Phase 2 employer reporting guidelines

• consider how some of the information you already report through STP is changing

• find out what new information you'll need to report and consider where you capture and store some of this information now if it's not in your payroll system

• review your business and payroll processes, and plan for how and when you'll need to do this.

XERO CLIENTS

Xero’s product suite was updated to provide critical support during the COVID-19 crisis, with updates across cash flow management, tax and payroll. This additional work has, however, impacted their timeline on STP Phase 2. As a result, Xero has requested and received a deferral from the ATO which gives its customers more time to transition.

While there is nothing you need to do just yet, it’s important to be across these new requirements. For those reporting STP using Xero, we'll provide further updates when available about what you need to do.

For more information, you can visit the ATO website.