We have all been submitting STP to the ATO for over a year now.
Soon STP will be expanding to STP Phase 2
The ATO says that STP Phase 2 “will reduce reporting burden for employers who need to report information about their employees to multiple government agencies. It will also help Services Australia’s customers, who may be your employees, get the right payment at the right time.”
When STP Phase 2 is implemented additional information will be sent to the ATO. Most, if not all the additional information will be captured by the existing Xero Payroll software.
This additional information includes:
- TFN declaration details
- Termination reason
- Employment basis eg Full-time, Part-time, Casual
- More detailed recording of Gross wages. These are currently grouped together and reported as one Gross wage amount. In STP Phase 2 we will be reporting the following separately:
- paid leave
- bonuses and commissions
- director’s fees
- lump sum W
- salary sacrifice
Some benefits of STP Phase 2
- Employers will no longer need to send TFN declarations to the ATO. Employees will still need to provide it to employers and the document will still need to be kept with your employee records.
- Employers may no longer need to provide separation certificates when an employee leaves. The date and reason an employee leaves will be in the STP report.
- Child support deductions and/or garnishees can be reported through STP. This reduces the need to send separate remittance advices to the Child Support Registrar.
- The additional payroll details will more accurately and completely pre-fill details on employee individual income tax return.
- The new information reported will allow the ATO to tell employers if they’ve provided employers with incorrect information that may lead to incorrect tax calculations. For example, where an employee hasn’t notified employers that they have a Study and Training Support Loan.
Due dates – Xero deferral until 31 Dec 2022
The original start date was to be 31 December 2021, however this has been rescheduled for Xero users.
The start date is 1 January 2022, however this depends on the digital service providers being ready to implement these changes.
There is a lot of work to do in the digital payroll systems to comply with these extra requirements. As a result, Xero has secured a 12-month deferral for all partners and customers until 31 December 2022.
What do you need to do now?
There is nothing you need to do just yet.
Xero is working closely with the ATO to upgrade the payroll system to capture all STP Phase 2 information. This will be communicated as soon as these changes are available so that you can be prepared throughout the transition. Just as with phase 1, the Xero team is working to make the entire process as simple as possible.