Expanding Single Touch Payroll Phase 2

In the 2019-20 Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information. This was introduced to reduce the reporting burden on employers who need to report information about their employees to multiple government agencies. It also will help Services Australia’s customers, who may be your employees, get the right payment at the right time.

The mandatory start date for Phase 2 reporting is 1 January 2022. The transition, however, is flexible.

Flexible Transition

To support employers, the approach to STP Phase 2 is flexible and based on your business readiness and individual circumstances.

Digital service providers (DSPs) who need more time to make the changes and update their solutions to support STP 2 can apply for a deferral for their customers. If your DSP has a deferral, they will let you know. If you can start reporting by your DSP's deferral date, you don't need to apply for more time.

If your solution will be ready for 1 January 2022

• If your solution is ready for 1 January 2022, you should start Phase 2 reporting.
• If your solution is ready and you can start Phase 2 reporting before 1 March 2022, you'll be considered to be reporting on time and you won't need to apply for more time.

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. 
• 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.

Benefits of STP Phase 2

There are many benefits of the rollout of STP Phase 2 including: 

• 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 make a Lump Sum E payment, you won't need to provide Lump Sum E letters to your employees.
• Makes tax time easier as you have better visibility over the types of income received
• For the full list of benefits, please click here

For more information on the transition period as well as on what the change means for you and your business, please read the ATO's official page here