Although the official start for STP Phase 2 reporting is 1 January 2022, Infinet Cloud and our customers are covered by the deferral until 1 September 2022. Here you can download and review this referral so that you understand what it means for your business.
Other than familiarising yourself with your obligations as an employer - there is nothing that you need to do right now, however before you start reporting via STP Phase 2, you will need to review all your employee payroll data to ensure that it meets the new ATO reporting requirements. This will include updating some fields on the employee record and also adding new ATO reporting categories to some of your pay components subtypes.
This article contains a summary of some of the key things that are changing and also those things that are staying the same. It is very important that you familiarise yourself with these changes and understand what you need to do in order to report correctly.
We also recommend you review the following articles from the ATO to assist you with this transition and what you should be doing now to prepare.
STP Phase 2 - What is changing?
Under STP Phase 2, your current reporting process will not change however you will be required to report additional information to the ATO. We have summarised some of the main changes for you below:
- Disaggregation of gross: Currently, STP reporting is based on a total gross amount which includes all different payment types. With STP Phase 2, these amounts are now required to be broken down in detail to include everything separately. So your report will show separate lines for paid leave (including a new code for leave cashout during service), allowances, overtime, bonuses & commissions, directors fees, Lump sum W (new code for return to work payments) & salary sacrifice. See this link for more information: Disaggregation of Gross
- Termination reason: The reason why someone is terminated from your business will be included in your STP report e.g if it was voluntary or a redundancy. Employee separation certificates will no longer be required.
- Employment Status: It will be mandatory to report an employee’s work type. This includes full-time, part-time or casual, and also new categories like labour hire, volunteer agreement or non-employee.
- Income types: Previously income was classified under one label, in Phase 2 each amount paid to an employee is assigned to an income type. This includes salary and wages, closely held payees, working holiday makers, labour hire etc. It's very important that you classify you employees correctly relevant to these income types.
- Country code: A country code is now required for employees if you make a payment to a working holiday maker, you must also provide information about their home country.
- Tax file number declaration: TFN information will be included in your STP report for each employee which means TFN declarations will no longer need to be sent to the ATO manually.
- Child Support Deduction and Garnishee: Optional reporting to Services Australia
STP Phase 2 - What isn't changing?
While you'll need to report additional information in your STP report, there are many things that will stay the same, such as:
- the way you lodge
- the due date
- the types of payments that are needed
- tax and super obligations
- end of year finalisation requirements.
To enable STP Phase 2, refer to this article: Enabling STP Phase 2.