Single touch Payroll Phase 2 - What you need to know

The Government announced that Single Touch Payroll (STP) would be expanded to include additional information. Under Single Touch Payroll Phase 2, the Australian Government will require all employers to report additional information through STP on or before each payday. This information will include details such as income or payment type and the reason for any cessation of employment. All Australian businesses that have employees on their payroll will be impacted by this change.

-    Reduce the burden for employers reporting to multiple Government agencies

-    Improve visibility of payroll data to support the delivery of social welfare

-    Reducing the need for separation certificates

-    Reducing the need to send Tax Declarations to the ATO ( you are still required to get a signed tax declaration from your employee)

The main changes are:

Tax file number declaration - STP Phase two eliminates the need to send or receive an employee's tax declaration, new fields will enable the employee tax information to be sent via STP reporting.

Income type and country codes - A range of income types have been added to identify employees who may have specific tax treatments, concessional reporting arrangements and in some instances country codes will be required. For example when you make a payment to a working holiday maker, you need to provide information about the employee's home/host country.

Termination reason - No separation certificate will be required under STP phase 2. A reason for termination will be mandatory when an employee ends their employment

Disaggregating Gross - STP Phase 1 everything was reported in Gross except for some allowances, under Phase 2 Gross will now be split out and categories as per the payment type. For example:

- Paid leave -  Paid leave taken, cashing out leave, Paid Paternal leave and unused leave on termination will all be reported separately

- Allowance types -   Cents per Kilometre, Award Transport Payments, Laundry, Overtime meal Allowances, domestic and overseas travel allowances and Overseas accommodation, Tool allowances, other allowances, Tasks and Qualifications/certificates

- New lump sum types  - Lump sum W (Return to work) and and Lump sum  E (Back payments from previous financial years)

- Bonus/Commissions - Is now no longer part of Gross and will be reported separately

- Directors Fees  - Will be reported separately. A “Directors Fees” kind will be required

- Child Support Reporting - The option to report Child support payments separately.  

Your STP Phase 2 report includes a six-character tax treatment code for each employee. The tax treatment code is an abbreviated way of telling the ATO about factors that can influence the amount you withhold from payments to your employees who are claiming a tax threshold, student loan, medicare levy exemption

You can find the full details on the Link to STP Phase 2 https://www.ato.gov.au/Business/Single-Touch-Payroll/In-detail/Single-Touch-Payroll-Phase-2-employer-reporting-guidelines/

These are the key sections:

•  1st June 2022: New Version(Build) available for deployment to clients
•  1st - 30th June 2022: All payroll clients upgrade to new version and prepare data for STP Phase 2 - A webinar date TBC
•  1st July 2022: Clients start reporting on STP Phase 2

•  Become familiar with STP2 - read the above key sections on the ATO website.
•  Make kinds inactive that you do not use.
•  Think of any tricky payroll situation you may have and work out now how that fits under the new STP Phase 2 Reporting Rules.
•  Do you make any manual adjustments to payslips before posting?  These need to become automatic within the payroll system so speak to JobBag Support about these.

•  Most of this reporting is in the background, however what is reported in STP is based on what you put into JobBag. Via the tax dec, the address book employee record
•  Before you start STP Phase 2  reporting, your payroll kinds will need to be mapped to STP Phase 2.  
•  Tax declarations will be entered as normal
•  Termination reason will need to be entered

Please direct all your questions to JobBag Help Centre on 02 8115 8090 or email support@jobbag.com.