The ATO is expanding the information that your business sends through Single Touch Payroll (STP). From 1 January 2022, most employers will be required to send additional information such as commencement date of employment, cessation date of employment, reasons for leaving employment and work type (ie full-time, part-time etc). The basic information of salary and wages and super liability information in phase 1 will also be further drilled down in phase 2 moving away from just reporting the gross amount.
Single Touch Payroll (STP) was originally introduced in 2016 as a way for employers to report their employee’s tax and super information to the ATO in real time. Most employers, regardless of the number of employees were required to start reporting from 1 July 2021, this includes small employers with closely held/related payees. However, employers with a withholding payer number (WPN) have until 1 July 2022 to start reporting payments through STP.
In phase 1, the information sent to the ATO through STP included basic salaries and wages, PAYG withholding and super liability information. The amount of information sent to the ATO is being expanded in phase 2, which has a mandatory starting date of 1 January 2022. From that date, each employee included in the STP report will need to have either a TFN or an ABN attached as well as a commencement date.
Cessation date and the reasons for employees leaving is another piece of extra information which will need to be included in phase 2 reports.
Additional information will also need to be provided on the employment basis of employees according to their work type. For example, full-time, part-time, casual, labour hire, voluntary agreement (ie a contractor to bring work payments into the PAYG withholding system), death beneficiary, or a non-employee (ie a contractor who is included for voluntary reporting of super liabilities only).
According to the ATO, the phase 2 report will also include a 6-character tax treatment code for each employee. The code will be automatically generated by the STP software and is an abbreviated way of outlining the factors that can influence amounts withheld from payments. For example, it’ll let the ATO know whether they are regular employees that have the tax-free threshold applied or not. It will also let the ATO know if they are in a special category of employee, such as actors, horticulturists/shearers, working holiday makers, seasonal workers, foreign residents, or seniors.
The basic information of salary and wages and super liability information in phase 1 will also be further drilled down in phase 2. Instead of reporting the gross amount, employers will need to report the following separately:
- gross salary and wages;
- paid leave – including annual, long service, personal/carer, RDOs, study leave, compassionate leave, family and domestic leave, paid parental leave, workers’ compensation, ancillary and defence leave, and cash out of leave in service;
- allowances – including cents-per-km, award transport payments, laundry, over time meal allowance, domestic or overseas travel, tool allowances, qualification and certification allowances, task allowances, and other allowances;
- overtime – including on-call, stand-by or availability allowances, call back payments, excess travel etc;
- bonuses and commissions;
- directors’ fees – including remuneration paid to both working and non-working directors;
- lump sum W – return to work payment; and
- salary sacrifice – including reporting pre-sacrifice amounts as well as separate reporting of salary sacrifice.
While most of this increase in information will be automatically taken care of in most employers’ software solutions, the increased stratification of reporting requires more attention to be paid to payroll to ensure all the information entered into the system is correct.
Need help on STP?
If your business needs help with implementing phase 2 of STP, we’re here to help. While most of it will automated, you’ll still need to get the details right for various payment. Remember, you have until 1 January 2022, but that’s less than 6 months away. Don’t leave it till the last minute.