We have now had an opportunity to become familiar with Single Touch Payroll (STP). STP Phase 1 was to ensure all employers moved to STP enabled software so they can electronically report their payroll data to the Australian Taxation Office (ATO).

Over the coming months, the ATO will move employers to STP Phase 2. STP Phase 2 increases the data being collected by the ATO contained within each pay run.

For employers using MYOB or Xero, STP Phase 2 does not apply until your first pay run after 1 January 2023. For now, there is nothing for you to do. However, please note that the move to STP Phase 2 is going to require employers to update the details in the payroll system for each of their employees.

If you are using another software provider, please check when STP Phase 2 commences for you.

Benefits of STP Phase 2

STP Phase 2 has many benefits for employers and employees including:

• Automating Tax File Number (TFN) declarations straight to the ATO.
• Employers are no longer required to provide Lump Sum E letters to employees.
• Streamline requests between the ATO and Services Australia making it easier for employers/employees to interact with agencies like Centrelink and Medicare.

Key Differences of STP Phase 2

STP Phase 2 will increase the information being reported to the ATO each pay run including:

• Adding a Tax Code to each employee.
• Separately reporting paid leave payments.
• Separately reporting any ‘cashed out’ leave payments.
• Salary Sacrifice will be separately reported and no longer being able to form part of the employer’s superannuation guarantee obligations.

For additional information, please visit the ATO website.
 
We will be in touch with more information relating to MYOB & Xero as it becomes available.