Single Touch Payroll or STP is a system that allows employers to easily report their payroll information to the Australian Tax Office at the same time as they pay their employees. With the entire process consolidated, employers are no longer required to collate their payroll information manually at the end of each financial year – it is done automatically. Both the employer, the ATO, and the employees benefit from this swift and simple system. With the rollout of mandatory STP beginning in 2018, the system has expanded to include a wider range of companies each year.
So, what is STP Phase 2? It’s an expansion of the information required from you by the Australian Tax Office.
What Changes Have Been Made to STP in Phase 2?
STP Phase 2 will make it easier for employers to report even more information, across all income streams, to the Australian Tax Office. This information falls into two categories: gross income and expenses.
STP Phase 2 will enable employers to report the following:
- Gross residual
- Commission and bonuses
- Paid leave
- Salary sacrifice
- Director fees
- Car expenses
- Meal allowances
More than this, employers will be expected to provide details such as the basis of employment, employees tax scale, reasons for cessation, and offset amounts. This additional information will also be submitted in the form of automated reports. It will be easier to report on back payments, and employers will have one less report to submit at the end of each tax year because they will no longer need to submit employee’s tax file number declarations.
Who Does STP Phase 2 Apply To?
The first phase of single touch payroll was rolled out on the 1st of July 2018 for companies employing 20 or more people. As of the 1st of July 2019, it became mandatory for smaller companies too. With all these companies already using STP, the next phase of STP becomes compulsory from the 1st of January 2022, if the payroll solution you are using is ready and you are able to start Phase 2 reporting before 1st March 2022, you will be considered to be reporting on time and you won’t need to apply for more time.
Every company in Australia will have to follow the new requirements of STP Phase 2 unless they have a deferral or an exemption. By now, most companies are already using an STP system.
What Hasn’t Changed
It may seem like there are many changes, but there are also several things that haven’t changed.
While you do need to submit additional information when you file your payroll, the following remains the same:
- You will still lodge your payroll in the same way.
- You still submit it by the same due date.
- The same types of payments are still needed.
- You still have to meet your tax and super obligations.
- You still have to meet your end of year requirements.
When it comes to STP Phase 2, it’s best to get ahead of the curve. Arrow is expanding Tencia, their comprehensive business software package, to allow employers to submit their payroll automatically through its Single Touch Payroll capabilities. To ensure you will be ready and compliant with the new STP Phase 2 requirements–and avoid penalties–find out about Tencia.