Under Single touch Payroll Phase Two, the Australian Government will require all employers to report additional information such as income or payment type through STP on or before each payday.

The main changes set out in STP Phase two are as follows:

1.    Employee tax information will be incorporated via STP reporting, thus eliminating the need for employees to submit tax file declarations to the ATO as a separate process.

2.    The requirement to divulge specific information concerning payments made to employees that might incur specific tax consequences.

3.    Specifying a reason that an employee leaves your organisation will now be mandatory.

4.    Paid leave won't be included as part of gross earnings when reporting earnings via STP

5.    You’ll need to report all allowances separately (as opposed to some being reported as gross) in your Phase Two STP report.

6.    Directors’ fees must be reported separately in your STP Phase 2 report.

7.    Lump sum return to work payments need to be individually identified.

8.    Your STP Phase 2 report includes a six-character tax code for each employee. This code tells the tax office about payments that can be withheld from employees.

9.    Bonuses and commissions will now be reported separately as opposed to with gross payments.

10. Lump Sum E (back pay) payments need to be reported in the year that they originated in before finalising an employee’s records.

What you need to do:

Ensure your existing employee profiles are STP compliant.

If you are using Xero or MYOB, click on the relevant link below for instructions on how to set your employees up for STP Phase 2 reporting.

Xero – watch here

MYOB – click here

If you would like more information about how ensure that your business is compliant with STP Phase Two, please contact us on 02 6566 2200.