Reporting to the Australian Taxation Office (ATO) has long been challenging, particularly for business owners trying to keep track of salaries, wages, tax, superannuation and other employee entitlements and transactions.
In a bid to simplify the reporting process, the ATO introduced Single Touch Payroll (STP) in 2018, which was to be rolled out in phases.
The STP Phase 2 rollout is currently underway, but the ATO has now announced that businesses that use Xero will be granted an extension to implement Phase 2 until the 31st of March, 2023.
Here is what you need to know to stay compliant as a business and make sure your ATO obligations are met and that you can make the switch within the timeframe:
What is STP Phase 2?
In essence, STP is a way of reporting your employees’ salaries, wages, tax withheld and superannuation to the ATO with each pay run.
Following on from Phase 1 of the Single Touch Payroll rollout that began in 2018, STP Phase 2 will expand these reporting requirements.
This is being implemented to simplify the reporting process and make it easier to provide specific employee information to the ATO and other government agencies like Services Australia.
When is it happening?
Phase 2 has already officially begun, with the ATO having originally set a mandatory reporting start date of 1 January 2022. However, an extension has now been granted for Xero users until 31st March 2023. Additional deferrals and exemptions are available for those who need more time to update their software.
If you are unsure if this applies to you, give us a call, and we can help you identify what applies to your business.
Why is it beneficial?
STP Phase 2 offer many benefits for employers, such as:
- Automated Tax File Number (TFN) declarations.
- If a Lump sum E payment is made, a Lump sum E letters will no longer need to be provided to employees.
- Streamlining requests between the ATO and Services Australia, making it easier for employers/employees to interact with agencies like Centrelink and Medicare.
- No need for separation certificates when employees leave. The date and reason an employee leaves will be in your STP report.
- Voluntarily report child support deductions or garnishees, reducing the need to send separate remittance advice to the Child Support Registrar.
What is staying the same?
While you’ll need to start reporting more information to the ATO, some things will stay the same, such as:
- The way you file your pay run to the ATO
- The due date of your report
- The types of payments that are to be reported
- Tax and superannuation obligations
- End of year finalisation requirements.
How do I report through STP?
With the right software, such as Xero, reporting through STP is easy. You can download the Xero STP checklist or ask us about Xero accounting integration! For more information on STP Phase 2 reporting guidelines, head to the ATO.
If you have any questions or queries regarding STP Phase 2, don’t hesitate to contact the expert team at PCR Accounting & Advisory.
Owner of PCR Accounting & Advisory, Peter Marmara-Stewart is a top-tier accountant and financial advisor dedicated to helping clients reach their business goals and achieve financial freedom. Peter is highly regarded for his client-focused approach and entrepreneurial spirit, catering to a diverse range of professionals across a wide scope of industries all across the country. Peter’s expertise can help you plan effectively, set goals, maximise profits and protect your assets. Get in touch today on (03) 9847 7516.