Single Touch Payroll Phase Two

How ready are you for the changes ?

Don’t forget time is running out

MYOB and Xero have a extension until January 2023

What is Single Touch Payroll Phase 2?

When Single Touch Payroll (STP) was introduced in July 2018 it changed the way you sent your payroll information to the ATO. The ATO is now expanding the STP to Phase 2 which becomes mandatory from 2022.

The main purpose of this new rollout is to continue to reduce administrative burden for employers and help employees get the right payment at the right time.

What is changing?

To support the new reporting requirements under STP Phase 2, your STP solution will need additional configuration to support Phase 2 reporting. To be STP2 compliant, your payroll software will require additional information around:

  • Employees
  • Payment items
  • Deductions
  • Salary sacrifice
  • Child support payments

What stays the same?

The purpose of STP is to automate information, where your STP enabled payroll solution sends payment, tax and super information directly to the ATO. The following process and information shared will not change:

  • How and when you lodge your STP reports
  • End of year finalisation requirements
  • Your tax and super obligations
  • The due date of your reports

The benefits of Phase 2

The aim of the new phase is to streamline employer interactions with multiple government agencies and improve the employee government payments. The benefits of Phase 2 include:

  • No longer lodging electronic tax declarations
  • Issuing of separation certificates
  • Reduced interactions with Centrelink & Services Australia
  • Earlier notification of possible payment issues 

What does this mean for me?

The Employer 

The streamlining of information in the updated

STP Phase 2 will reduce stress on your finance team.

You will see the reduction of admin overheads as well as

quicker feedback from the ATO on errors.

The Payroll Administrator

Depending on the organization size and resource availability

Its best to get prepared when its convenient for your team

Start planning the best time to transition by staying informed about the requirements.

Be sure to download a copy of the Employer Reporting Guidelines from the ATO to learn more.

The Employee 

After the transition to Phase 2 by all organisations,

the employees will benefit from having more accurate

and transparent information streamlined to one source.

This means employees will less likely have a debt with the ATO or Centrelink

as their income is reported live. They will also have quicker processing with Centrelink items.

What can your business do to prepare?

The expectation from ATO is that all businesses need to have their payroll information to meet the new requirements including employee details and reporting categories in 2022.

However, the ATO has a flexible and reasonable approach to this transition and is willing to support businesses based on their readiness and individual circumstances.