Single Touch Payroll (STP) Phase 2 – What You Need to Know

/in /by

What is Single Touch Payroll?

Single Touch Payroll (STP) legislation requires employers to report wages, PAYG withholding, and superannuation information directly to the ATO using an online payroll system. It was introduced by the Australian government in 2018 as a way to encourage small businesses to be more compliant in the way they report superannuation or PAYG instalments to employees.

Is Single Touch Payroll Compulsory?

Yes.

Single Touch Payroll (STP) reporting has been compulsory for small businesses (those with 20 employees or less) since July 1, 2019.

STP has been compulsory for employers with over 20 employees since July 1, 2018 – but by now everyone should be involved.

What is Single Touch Payroll Phase 2?

STP phase 2 aims to streamline the reporting obligations for the payer and payee and remove the need for manual reporting to other government agencies. 

With this, phase 2 will bring more complex reporting and therefore like phase 1, businesses and vendors will have to prepare for the challenges of the next roll-out.

Key changes in Phase 2

The additional information you need to report should already be captured in your current payroll software.

The key changes to the STP report include:

Disaggregation of gross income

Your STP report will separately itemise the following components of the gross amount:

  1. Allowances
  2. Bonuses and commissions
  3. Director’s fees
  4. Overtime
  5. Paid leave
  6. Salary sacrifice

Allowances

The expanded STP report will now report all allowances separately, such as:

  1. Cents per km vehicle costs
  2. Overtime meals
  3. Travel
  4. Tools
  5. Tasks
  6. Qualifications and certificates

Employment Conditions

You will provide extra employment conditions information, such as:

  1. Cessation date and reason
  2. Employment basis
  3. Tax treatment

As you provide detailed information, this means that you will no long need to send TFN declarations to the ATO.

Paid leave

Paid leave will no longer be incorporated as part of gross earnings when reporting earnings via STP. Rather, paid leave will be reported using itemised leave type codes.

What happens if I do not comply with Single Touch Payroll?

There is a $210 fine every 28 days that a Single Touch Payroll report is overdue. This can accumulate up to a maximum value depending on the size of the business. These are:

•             $1,050 for small businesses

•             $2,100 for medium businesses

•             $5,250 for large businesses

•             $525,000 for significant global entities

Get ready for Single Touch Payroll Phase 2

Ensuring you’re with a reliable software vendor that will be ready for the mandatory start date is key for STP success. Our awesome team is already working on the phase 2 STP changes to ensure new reporting requirements are ready for January 2022.

If you’re a business looking to be proactive in meeting STP phase 2 requirements, get in touch with us at admin@simprotax.com.au