Overall
The expansion of STP (also known as STP Phase 2) will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies. The mandatory start date for STP Phase 2 reporting will be 1 January 2022.
Key changes
Employment conditions
The extra information you will include in your STP report will mean you no longer need to send us Tax File Number (TFN) Declarations – you will only need to keep them with your employee records.
This information includes:
■ Employment basis – the work pattern or engagement relationship (for example, whether your employee is fulltime, part-time or casual).
■ Tax treatment – by reporting some extra information each payday, you’ll help us identify the factors that influenced how you calculated the pay as you go withholding (for example, where your employee has notified you that they have a Study Training Support Loan).
You will also need to provide information if your employees cease employment that will reduce the need for you to provide them with separation certificates. This information will include a:
■ Cessation type – you will need to provide a reason for the separation in your STP report (for example, if it was voluntary, a redundancy, or due to illness).
Income type and Country code
The reporting of income types and country codes is being introduced to identify payments you make to your employees with specific tax consequences and to make it easier for them to complete their individual income tax return. It will also help us identify where you are using a concessional reporting arrangement, such as for closely held payees.
Country codes will need to be reported about the home country of your employee who is either an inbound assignee or working holiday maker, or the host country of the employee who is an Australian resident working overseas.
Disaggregation of gross
Your STP report will separately itemise the components which make up the gross amount by the following payment types:
■ bonuses and commissions
■ directors fees
■ paid leave
■ salary sacrifice
■ overtime
■ allowances
■ gross (other).
You will need to report all allowances separately, not just expense allowances that may have been deductible on your employee’s individual income tax return.
Salary sacrifice
From 1 January 2020, salary sacrifice contributions can no longer be used to reduce ordinary time earnings or count towards your minimum superannuation obligations. You will need to report salary sacrificed amounts in your STP report.
Lump sums
Changes to how lump sum payments will be categorised include both the following:
■ Lump sum E – a financial year indicator has been added, which will eliminate the need for you to provide lump sum E letters in most cases.
■ Lump sum W – the return to work payment that occurs in extremely limited circumstances and is taxed concessionally (formerly reported in STP under Payee Gross) is now separately itemised under this new label.
Visit ato.gov.au/stp to find out more about Single Touch Payroll.
