By reporting additional information, the goal of introducing STP Phase 2 is to 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.
The good news is, the transition will be made flexible for you. Even though the mandatory start date is 1 January 2022, your own start date could be deferred depending on your specific circumstances.
STP Phase 2 reporting requires your digital service provider (DSP) to make updates and changes to their software/solution for the new compliance. If you DSP needs more time to do this, they may apply for a deferral for all their customers and will let you know. The DSP deferral date will become your STP 2 start date automatically.
If you need more time
- You can apply for more time past your DSP’s deferral if you need more time to transition.
- You’ll be able to apply for a delayed transition from December 2021. Registered agents will also be able to apply.
- There won’t be penalties for genuine mistakes for the first year of Phase 2 reporting until 31 December 2022. This includes employers who have already started Phase 2 reporting.
Most of 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
- Employment and taxation conditions
- Income types
- Country codes
- Child support garnishees and Child support deductions
- Reporting previous Business Management Software IDs and Payroll IDs
Some key benefits for employers
- You’ll no longer have to send the ATO your employees’ TFN declarations. Your employees will provide it to you, and you’ll need to keep it with your employee records.
- If you’re using a concessional reporting option, such as for closely held payees or for inbound assignees, you’ll be able to tell the ATO through reporting income types.
- If you make a Lump Sum E payment, you won’t need to provide Lump Sum E letters to your employees. You’ll have included the amount and the period it relates to.
- If you change software or your employee’s payroll ID, you can tell ATO in your STP report if your solution has this functionality. This will help fix issues with duplicate income statements for employees in ATO online services through myGov.
Your DSP will update their STP-enabled software to offer Phase 2 reporting. When your STP-enabled solution is ready, your DSP will let you know what you need to do.
Meanwhile you can review the STP Phase 2 employer reporting guidelines to help you prepare.
Please note that this article is intended to be a general guide only, and should not be seen to constitute legal or tax advice. Where necessary, you should seek a second professional opinion for any legal or tax issues raised in your personal or business tax affairs.