Single Touch Payroll (STP) was first introduced by the Australian Government in July of 2018.
STP streamlines the reporting of employee-related tax and superannuation to the ATO. This reporting is facilitated through STP-enabled accounting or payroll software.
In the 2019-20 Federal Budget, the Government announced its plans to expand data collected through STP. The Australian Taxation Office (ATO) has recently announced further guidance on the expansion of STP (also known as STP Phase 2) including the announcement of the proposed mandatory start date of 1 January 2022.
Here is a summary of what we know so far.
STP – What is Currently Reported
Currently, businesses report payroll information for their employees to the ATO each time they are paid through STP-enabled software. Payroll information includes:
- • Salary and wages
- • Pay as you go (PAYG) withholding; and
- • Superannuation
PAYG Payment Summaries are no longer issued to employees, who can obtain their payroll information directly through their MyGov accounts.
This information will continue to be reported after the introduction of STP Phase 2.
STP Phase 2 – What’s Changing?
1. Employment Conditions
It is proposed the following information will be reported for employees as part of the expansion of STP:
- • Employment Basis (e.g employees’ classification as full-time, part-time, casual)
- • Tax treatment (e.g employee status with respect to Study Training Support Loans)
- • Certain information regarding cessation of employment (to eliminate the need to provide employees with separation certificates)
Reporting the above information to the ATO will mean employers will no longer need to send Tax File Number (TFN) declarations to the ATO.
2. Child Support Garnishees and Child Support Deductions
This is optional and if reported via the STP report, will reduce the need for separate remittance advice reporting to the Child support registrar.
3. Income Type and Country Code
The reporting of income types and country codes on the STP reports is being introduced to identify payments made to employees with specific tax consequences to make it easier for them to prepare their tax returns.
The country codes are being included to report information about an employee’s home country to the ATO.
4. Disaggregation of Gross Income
It is proposed the STP report will separately itemise components that make up an employee’s gross income by the following payment types:
- • Bonuses and commissions
- • Directors’ fees
- • Paid leave
- • Salary sacrifice
- • Overtime
- • Allowances
- • Gross (other)
5. Lump Sums
Changes to how lump sum payments are categorised will apply to Lump sum E and Lump sum W payments.
6. Reporting Previous Business Management Software ID’s and Payroll ID’s
Business sometimes changes their business structure or software which produces new business management software or payroll ID’s.
It is proposed that businesses will now be able to provide these ID’s to the ATO to help reduce and fix issues with duplicate income statements in an employee’s MyGov account.
Note: These are proposed measures and are subject to the passage of legislation.
The team at EMspire Advisory are trusted, qualified chartered accountants and work closely with their key stakeholders to achieve the best possible outcomes.
If you think you would like further information on STP or STP Phase 2, reach out to our friendly team today!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances. The team at EMspire Advisory are experienced accountants, bookkeepers, and tax agents in Sydney and would like to help you create, grow and succeed in business.