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Single Touch Payroll (STP) Phase Two Explained

Improving visibility of employee payments and reporting on super was a key driver for the introduction of Single Touch Payroll.  This theme continues for phase two.

Payroll Software Providers need to comply with new ATO requirements by 1 July 2021.
And, we'll be ready to support our payroll partners.

The ATO Needs More Information

Phase two will make it easier for employers to report specific payment details made to employees across all income streams.
 

A. Gross Income, a breakdown which includes:

o    Gross residual (excluding below)
o    Salary Sacrifice (including Salary Sacrifice Super & other Salary Sacrifice)
o    Bonus & Commissions
o    Overtime
o    Director Fees
o    Paid Leave (not limited to; Cash-out of leave, Paid Parental, Workers Compensation).

B. Allowances, a breakdown which includes: 
o    Car expense, laundry allowances, meal allowance, travel, accommodation.

New Fields Will Be Introduced To Give More Accurate Descriptions
  • employment basis

  • reason for cessation

  • tax scale

  • offset amount

Simpler, Better Reporting

Automated reports
Child support agencies will automatically receive reports for deductions or wage garnishing as a total for the period. No more separate reporting.

 

Easier to report on back payments
Updated capability to capture back-payments, and payments in arrears for previous reporting periods.

One less report
With the new format of the STP report, employers will no longer need to send in employees TFN declaration.

Updated Privacy Measures

Updated reporting capability to protect data with additional transition fields around the use of IDs, and ensuring previous data isn’t shown on screen.

The ATO is planning on rolling out Phase 2 of Single Touch Payroll (STP) after the successful implementation of the first release.  Here’s a summary of what we know so far. 

What it means for you

Single Touch Payroll Phase 2 is a bigger move towards more complete digital records and reporting. Making it easier for everyone.

Employee

  • All your information will be in one place –
    My Gov.

  • Less paperwork and more complete digital record.

  • It will be easier to understand how you’re getting paid and how it’s defined by income type.

  • The breakdown will make it easier to identify payment types for tax and reporting purposes.

  • Making, tax time easier and understandable.
    It’s all there and your tax accountant can categorise payments made to you as per ATO standards.

Employers

  • Makes it easier to distinguish between the BMS ID & Payroll ID with no risk of duplication.

  • Alignment of your payroll components into specific groups to simplify the payment system to employees.
     

Simplified admin

No more employee letters to explain payments in arrears.
No more manual reporting of child support payments.
No more lodging of employee TFN declarations.

Payroll

  • Structured and simplified reporting by employers to the ATO.

  • Standardisation of payroll components into groupings for simpler.

  • Implementation of payrolls and EOY housekeeping by employers.

  • Realignment of income and data fields for simpler reporting.

  • Phase 2 isn’t a new build, it’s a remapping exercise.

  • Clearer & cleaner data remove misunderstanding around the use of BMS ID & Payroll ID which resulted in duplicate records.

Super

  • There’s no change to Super right now, but STP Phase 2 presents an opportunity to align reporting and payments from the same place. 

    Many of our clients are making that transition right now.

Our Approach

We’re part of the ATO’s STP Phase 2 working group and our role is to help guide the solution so it benefits everyone.

We’ll continue to keep you in the loop as more is known and development timelines are released.  

Right now there is nothing for you to do


Your account manager will discuss implementation plans closer to the time but if you have any questions about what this means for your business please reach out to them.