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Single Touch Payroll Phase 2 (STP)

From the 1st of January 2022, STP phase 2 has become mandatory in Australia. What is exactly STP?

Let’s go back a few years. STP started in July 2018 for those businesses with 20 + employees. It has been designed to reduce employers’ reporting burdens to the ATO. After 1 July 2019, it has become mandatory also for those businesses with less than 20 employees. Before this date, tax practitioners had to report information once a year, whereas now after every single pay run the information must go directly to the ATO (that is why you no longer need that piece of paper from your employer at the EOFY).

What’s changing with STP Phase 2:
It’s simply the next step in the STP journey, which comprises that:

  • New fields to report TFN declaration
  • Reporting by income item/country codes
  • Separate reporting salary sacrifice
  • Transferring YTD amounts
  • Adding new termination Type reason
  • Disaggregation of Gross*
  • Lump Sum E by financial year (voluntary)
  • New child support agency deduction and garnishee (voluntary)

What is not changing in STP phase 2:

  • the way STP are lodged
  • Due date of STP reports
  • Finalisation requirements
  • Taxation & Superannuation Rules

Disaggregation of Gross *
While in STP we communicated all Gross amounts as one ‘ figure’, now in STP2 we need to separate them into the following categories: gross, allowances item, bonuses & commissions, director’s fees, salary sacrifice, overtime & paid leave.

For those who need more information, the ATO has plenty of free webinar available for everyone to watch, and on their website, https://www.ato.gov.au/, there is a specific section dedicated to STP2. Ultimately, your bookkeeper & accountant are there to support and guide you though these changes.

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