Businesses urged to switch to Single Touch Payroll Phase 2

STP, payroll system, reporting

The Australian Taxation Office (ATO) has began writing to employers, informing them that Single Touch Payroll (STP) Phase 2 is now underway.

The ATO has urged those employers that are eligible to switch to STP Phase 2 but have yet to do so to start reporting as soon as possible. As of 14 June, the ATO has recorded that there are 144,000 employers reporting STP Phase 2 information for over 1.7 million individuals.

ATO Deputy Commissioner Emma Rosenzweig explained that the 2019-20 budget expanded the data collected by the ATO through STP. This expansion of data collection is otherwise known as STP Phase 2 which began on 1 January 2022.

“For employees, STP and STP2 mean that pay, tax, and super information is reported to us each time they are paid,” Rosenzweig said. “They can easily view their year-to-date tax and super information in ATO online services, or through their registered tax agent, whenever they want to check.

“For employers, STP2 will streamline reporting about their employees to multiple government agencies, saving time, money and red-tape, letting employers focus on their business,” Rosenzweig added. “For those who receive Centrelink payments, reporting will be simpler and easier. Payslip details will be pre-filled into Centrelink’s online account and app so people will simply need to check, confirm or change this information before submitting.”

Digital service providers needing more time to update their products have already applied for deferrals, which cover their customers. Employers using these digital service providers are reminded to transition to STP2 when their payroll product is ready.

As with the STP Phase 1 implementation, the ATO is taking a flexible approach to transition to Phase 2, thus employers and their registered agents can apply to the ATO if they need more time.

Rosenzweig reminded that employers setting up STP Phase 2 for the first time need to do the following to ensure a smooth transition:

  • Check when their payroll product will be ready for STP Phase 2 reporting.
  • Review pay codes if they are set up for amounts which now need to be itemised separately such as bonuses, commissions, director’s fees, and overtime.
  • Review allowances as they will be reported differently and changes to salary sacrifice reporting.

Employers needing help in implementing STP Phase 2 are advised as well to consult a tax or BAS professional or payroll provider.