What is Single Touch Payroll Phase 2?
The Australian government announced in the 2019–20 Budget that Single Touch Payroll (STP) would be expanded to include more information.
Employers who must report information about their employees to multiple government agencies will benefit from the expansion of STP which is also known as STP Phase 2. It will also assist Services Australia’s customers, who could be your employees, in receiving the proper payment at the appropriate time.
Phase 2 reporting is required to begin on January 1, 2022.
What are the Benefits of STP Phase 2?
Benefits for Employers
We will use the information from STP Phase 2 streamline employer interactions. For instance:
- You will no longer be required to send us your employees’ TFN (Tax File Number) declarations. It will be given to you by your employees, and you must keep it with your employee records.
- You will be able to tell us if you are using a concessional reporting option, such as for closely held payees or inbound assignees, by reporting income types.
- You would not need to provide Lump sum E letters to your employees if you make a Lump sum E payment. You will have included the amount as well as the time frame.
- You can tell us if your solution has this functionality in your STP report if you change the software or your employee’s payroll ID. This will aid in the resolution of duplicate income statements for employees in the ATO online services via myGov.
We will also share payroll information you report to us with Services Australia in near real-time. They will utilise it to make requests more efficient:
- for you to provide or confirm employee employment and payroll information
- from your employees to give employment and payroll information, like previous pay stubs
When your workers leave, you may no longer require to provide separation certificates. Your STP report will include the date and reason for an employee’s departure.
Child support deductions or garnishees (or both) can also be reported voluntarily through STP. This eliminates the need to send the Child Support Registrar separate remittance advices.
Benefits for Employees
Some of the changes in Phase 2 will assist us to streamline employee interactions, like:
- We will make it easier for employees to file their taxes because we will have a better understanding of the different types of income they have received and where it should be pre-filled on their individual tax returns.
- Over time, we will be able to tell if employees have provided you with incorrect information, which could result in them receiving a tax bill. For example, if an employee has not informed you that they have a loan for study and training.
We will also share STP data with Services Australia so that they can streamline customer interactions. They will utilise STP data to improve their services over time by:
- Saving their customers time filling out reports and claims by pre-filling details they already know.
- Lowering the number of times they will have to contact customers – STP will provide them with some information that they must verify over the phone or online.
- Streamlining claims – customers will no longer be required to submit as many documents.
- Increasing Family Tax Benefit processes – by sending email messages and SMS to their clients when they are eligible for benefits.
- According to STP data, their estimated family income may be too low.
- They have a new position.
- Their position has shifted.
- Assisting them in making timely payments to their customers
- If a customer owes money, STP data can be used to improve the customer experience. Services Australia can use STP data to learn about their customers’ recent employment and income history, which helps them repay any money owed.
Key Changes to the STP Report
DISAGGREGATION OF GROSS
A gross amount is currently included in your STP report. This is the sum of numerous components and payment methods. You will now need to report more information because some of these are treated differently for social security purposes.
EMPLOYMENT AND TAXATION CONDITIONS
There are numerous factors that influence how you handle your payroll employees. Among them:
- their employment basis
- information contained in their TFN declaration
- information about when and why they leave
You currently provide this information in a variety of ways and formats.
Phase 2 simplifies the process by incorporating the data into your STP report.
In your STP report, you already mentioned the type of income your employees receive.
In Phase 2, income types will be reported in order to provide more flexibility.
- Determine which payments you make to your workers have specific tax implications.
- Make it easier for them to fill out their individual tax returns
You may be required to report a country code on occasion. If you pay an Australian resident working abroad, for example, you will require offering information about the host country.
CHILD SUPPORT GARNISHEES AND CHILD SUPPORT DEDUCTIONS
In your STP report, you will have the option of including child support garnishees and deductions. This eliminates the need to provide the Child Support Registrar with separate remittance advices.
This is an optional feature that not all STP-enabled solutions will provide.
REPORTING PREVIOUS BUSINESS MANAGEMENT SOFTWARE IDs AND PAYROLL IDs
In your STP report, you may choose to include previous Business Management Software IDs and Payroll IDs. This can happen if you change your business structure or software and are unable to zero out or finalise previous records.
This information will assist us in reducing and resolving duplicate income statement issues for employees in ATO online services.