The Australian Tax Office (ATO) has announced the key changes which are set to be introduced under the Single Touch Payroll Phase 2 regime. This includes the categories of payments that employers will now be required to report.
The ATO has outlined that mandatory STP Phase 2 reporting will be commencing from 1st January 2022. This decision comes as the federal government looks to reduce the reporting burden for employers who are currently required to provide employee information to multiple government agencies.
The expansion of STP will result in extra information required to be reported each payday. This builds on basic wages and salaries information reported via the original STP regime which was first introduced in 2018.
The ATO has recently published a fact sheet for employers, outline that STP reports will soon need to be separately itemise the components which make up the gross amount, including bonuses and commissions, paid leave, directors’ fees, overtime, salary sacrifice, allowances and gross (other).
Employers will also be required to report if an employee is employed on a full time, part time or casual basis, the tax treatment for PAYG purposes, and the reason for separation when an employee leaves the organisation.
Income types and country codes will also be another requirement. These will need to be reported to make it easier for employees to complete their individual income tax returns.
Including the employee’s income type and country code will help the ATO identify where the employer is using a concessional reporting arrangement, such as for Closely Held payees.
Country codes will also need to be reported about the home country of your employee who is either a working holiday maker or an inbound assignee, or the host country of the employee who is an Australian resident working overseas.
It is also essential for salary-sacrificed amounts to be be included in an STP report, while lump-sum payments will be broken down into two different categories.
Some of the things that won’t changed under STP Phase 2 include; the way you submit your STP report, the types of payments that are in-scope for STP reporting, STP reports will still be due on or before pay day unless you are eligible for a reporting concession, taxation and superannuation obligations, end of year finalisation requirements.
It will also be possible for employers to provide the ATO with previous Business Management Software IDs and Payroll IDS where there has been a change in software or business structure to enable the Tax Office to fix problems with duplicate income statements for employees in ATO online.
Practitioners and employers have been informed that right now there is nothing they need to do as the ATO collaborates with software providers to update their STP-enabled software.
All STP-enabled solutions have different functions and updates for the expansion will be offered in a variety of different ways. What businesses are required to do to set up will be determined by what product the employer plans to use and how they manage their payroll.
It is speculated that there will be transitional arrangements introduced in the lead up to the 1st January 2022 deadline. Software companies, will be given an implementation date and the ATO are going to allow all their clients X number of months after the launch date.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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