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      What is Single Touch Payroll?

      Single Touch Payroll (STP) is an initiative of the Australian Government to work to reduce employers’ reporting burdens to government agencies. STP allows you to report employees’ payroll information each time you pay them through STP-enabled software. Payroll information includes: salaries and wages, pay as you go (PAYG) withholding, and superannuation.

      What are the changes?

      The expansion of Single Touch Payroll, referred to as ‘STP Phase 2’, to include additional information will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies, including Services Australia. STP Phase 2 will also reduce the reporting burden for employers who need to report various types of information about their employees to government agencies.

      For example, the changes will allow reporting of income types, such as salary and wages, closely held payees, working holiday makers, foreign employment income, Seasonal Worker Programme, voluntary withholding agreements and labour hire. They will also allow separate reporting of gross, paid leave, allowances, overtime, bonuses and commissions, directors’ fees, lump sum and salary sacrifice, instead of reporting a single gross amount.

      How does this impact me and when?

      The mandatory start date for Phase 2 reporting is 1 January 2022. It has always been intended that digital service providers (DSPs) can apply for deferrals that will cover any of their clients who use their solution. However, the professional bodies have been advocating for a deferral for employers, many of whom would have found it difficult to meet their new reporting obligations from 1 January 2022, given the ongoing focus on COVID-19 support measures and dealing with the challenges of lockdowns.

      Transitional arrangements

      According to recent updates from the ATO:

      • If your STP Phase 2 reporting solution is ready for 1 January 2022, you should start Phase 2 reporting. If you can start Phase 2 reporting before 1 March 2022, you will be considered to be reporting on time and you won’t need to apply for more time.
      • If you need more time, you will be able to apply for a delayed transition from December 2021. The ATO will not impose penalties for genuine mistakes for the first year of Phase 2 reporting, that is, until 31 December 2022.

      For further information around the potential benefits that STP Phase 2 will offer, please refer to the article written by our Senior Advocate, Robyn Jacobson, CTA, published by Accountants Daily on 1 October 2021, titled ‘Putting non-COVID Measures on the radar‘.



      Zoe-Marie Beesley

      Tax Policy Assistant

      The Tax Institute

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