As part of the expansion of Single Touch Payroll (known as STP Phase 2), from 1 January 2022, employers will need to report additional payroll information in their STP reports including:
- Separate reporting of paid leave, allowances, overtime, directors’ fees and salary sacrifice amounts;
- employment and taxation conditions (including information from the TFN declaration); and
- income types (for example, salary and wages, working holiday maker income, foreign employment income).
To support employers with the move to STP Phase 2 reporting, the Australian Taxation Office will take the following approach:
- Employers that can start Phase 2 reporting by their digital service provider’s deferral date (if applicable), do not need to apply to the ATO for more time. This includes those that are using payroll Software such as Xero, MYOB, or Quickbooks.
- If an employer’s software will be ready for 1 January 2022 and they are able to start reporting before 1 March 2022, they do not need to apply to the ATO for more time (that is, an automatic extension applies).
The ATO has also advised that penalties will not be applied for genuine mistakes in the first year of Phase 2 reporting until 31 December 2022.
Software provider's will advise closer the commencement date of any changes that need to be implemented in the way employees are set-up or payments recorded. As this advice is available we will contact clients to assist in any changes.