As part of the 2019-20 Federal Budget, the government announced that Single Touch Payroll (STP Phase 2) would be expanded with a mandatory start date of 1st January 2022. This expansion was intended to reduce reporting burdens for employers by ensuring multiple government agencies, such as Services Australia, receive the information in a timely and consistent fashion.
Your payroll provider (Digital Service Provider or DSP) may have already implemented Phase 2 reporting. If not, your DSP will have applied for deferral on behalf of their customers and you are covered under their deferral and no penalties apply before 31st December 2022. Individual employers can also apply for an extension past their DSP’s deferral date, if required, to transition. If you need more time you will need to supply details of your payroll supplier, the reason you are requesting delayed transition, and the expected date you will be able to transition.
According to the ATO, the benefits for employers of the expanded STP Phase 2 system include the streamlining of employer interactions including:
- No requirement to send employees’ tax file number declarations. This will be incorporated into STP Phase 2 reporting and employers just need to keep it with the employees’ records.
- Lump Sum E payments (back payments relating or accrued more than 12 months before the payment date) won’t require separate letters as the amount and period it relates to can be included in the payroll functionality.
- Separation Certificates may no longer be required as the date and reason for leaving will be in your STP report.
- Child Support deductions or garnishees can be voluntarily reported via the STP report reducing the need for a separate remittance advice to the Child Support Registrar.