If you’re a current employer or in the process of setting up a business, you need to understand your ATO reporting obligations with respect to your employees. Some important changes are about to come into effect. For the benefit of new employers, we’ll assume little or no knowledge of the present arrangement and begin by asking…
What is Single Touch Payroll?
Single Touch Payroll (STP) is the government system whereby your compatible payroll software sends wages, tax and superannuation information on your employees, direct to the ATO. STP is currently in Phase 1, but will soon be moving to Phase 2 as was announced as part of the 2019-20 Budget.
OK, so what is STP Phase 2?
Single Touch Payroll Phase 2 provides additional information relating to employees including commencement and cessation dates, employment basis, tax treatment, income types, relevant country codes (when paying employees overseas), child-support info, and changes to software and payroll IDs (where there could be duplication issues).
The mandatory start date is 1 January 2022. Your current payroll software provider will advise when it is ready to support STP Phase 2.
What are the Advantages to Employers?
Essentially, Single Touch Payroll Phase 2 will streamline the overall reporting process, eliminating some of the previously obligatory interactions between the employer and government (on behalf of their employees), the employer and Services Australia (Centrelink), and the employer and their employees directly.
For example, under STP Phase 2, an employer will no longer have to send their employees’ tax-file number (TFN) declaration to the ATO, merely keep them on record. They should also receive less requests for information about their employees from Services Australia. And they will no longer be required to send Lump Sum E letters to their employees. Note that these are just three things the streamlining will achieve – there are several others.
What are the Advantages to Employees?
Under STP Phase 2, employees will find that the additional info gathered makes it quicker and easier to submit a correct tax return. Relatedly, they will be informed when they have failed to notify their employer of something which could lead to them getting a tax bill. Employees will also find that their interactions with Services Australia are significantly reduced, with less contacts, filling out forms or verifying documents necessary in order to keep track of their financial situation.
Need Help with STP Phase 2?
Based in the Brisbane suburb of Bridgeman Downs but also serving rural Queensland, BMR Business Solutions has been operating for over 20 years. A Chartered Accounting practice, we provide expert advice and much more to clients from individuals to small, medium and large business operations. Contact our professional team by emailing firstname.lastname@example.org or phoning (07) 3353 7111 to arrange a consultation. We’re committed to helping you achieve your goals!