What’s coming up for Single Touch Payroll (STP) Phase 2?
As you may know, there’s several upcoming changes to payroll management due to the upcoming rollout of Single Touch Payroll (STP) Phase 2. At BusinessHub, we’ve been working in the background to ensure a smooth transition for you and your team ahead of the upcoming compliance date.
To help keep you up to date, we’ve gathered the latest news on the STP Phase 2 rollout. As always, our team is here to make sure you have all the information necessary to help guide you through this process.
What is STP Phase 2?
STP Phase 2 is the next step in the STP journey. While Phase 1 was concerned with reporting employee information to the ATO, STP Phase 2 will capture more detailed information. The benefit? The burden of compliance for employers and individuals will be reduced. It will also reduce administration work for Services Australia.
Whilst you will need to provide the ATO with more information, the way you submit STP reports will remain.
When will the changes be rolled out?
MYOB has secured a deferral for all Payroll users until 31 December 2022. To help ensure a smooth transition ahead of the compliance date, MYOB will be rolling out Phase 2 in three stages over the year.
Stage one: The first stage will start from April. This will include updates to the way new employee records are set up in payroll, to ensure STP Phase 2 compliance.
Stage two: This stage will begin rolling out mid-year and extend the set-up process to enable the transition of existing employee payroll records to STP Phase 2 compliance.
Stage three: This stage will begin in the second half of this year. It will see the new pay items from STP 2 finalised in your MYOB system.
As a BusinessHub client, we will continue to let you know as these stages progress and make sure you have all the available information needed to make your transition to STP Phase 2 as seamless as possible. This will include education webinars and guides to help you adjust to each stage.
What are the key changes?
Employee reporting changes
In STP Phase 2, the terminology previously known as Payment Summary Type has been replaced with a new term and definition called “Income Type”.
This change has the most impact on those employee’s currently reported as Payment summary type “Individual Non-Business”.
MYOB Advanced supports this change by:
Reporting by country code
Australia has tax treaties with many countries to reduce or eliminate double taxation. Income types must report the YTD income by Country Code to assist Australia to meet its international commitments. This only impacts employees classed as “IAA” or “WHM”:
MYOB Advanced supports the country code you need to capture via a new field called Country, located on the Taxation tab of the Employee’s Pay Detail's record.
To replace the former Onboarding section there is now a section in the payload called ‘Employment Conditions’. This section captures more information about the employee and is sent in every STP event rather than just once.
New information captured is the “Employment Basis Codes”, “Tax Treatment Codes” and “Tax offset Amount”. These fields provide context to the changes in the financial amounts for each Pay Event for government agencies using this data.
Employment Basis Codes
The employment basis selection was used to help inform the TFN declaration. In STP phase 2 this field has been expanded with new options and will now report in each STP event.
Additional codes for Employment basis:
Tax Treatment Codes
Tax Treatment codes help the ATO identify how the employee’s monetary tax values have been calculated. They are an abbreviated way of telling the ATO about factors that can influence the amount you withhold from payments to your employees.
MYOB Advanced will automatically handle the codes to be assigned to each employee.Back to top
Annual tax offset amount
Not previously reported in STP Phase 1.
Your employee may have given you a Withholding declaration which claims an offset amount to reduce the amount you withhold from their pay. You will need to report the amount claimed in your STP Phase 2 reporting. The annual tax offset amount only applies to regular employees who have claimed the tax-free threshold (meaning you can only report this for employees that you report a tax treatment code beginning in RT).
The ‘Total tax offset’ value is set in the Taxation screen in an Employee’s Pay Details. This value is entered as a yearly total and Advanced will calculate the portion to reduce PAYG in each pay, STP reports the ‘Total tax offset’ value.
The ATO now collects data that was previously reported to Centrelink via an Employment Separation Certificate. One of the data items the ATO now needs to collect for the Department of Services is a Cessation Reason. MYOB Advanced supports this by:
Payment reporting changes
MYOB Advanced supports the following changes for payment reporting by:
The amount that was reported as “Gross” for Individual Non-business employees in STP Phase 1, will now exclude payments classified as:
Paid Leave is required to be reported into different groups. These being:
In STP Phase 2, you must report all allowances separately. This impacts most income types, not just expense allowances that may have been deductible on your employee’s individual income tax return.
You will need to review how your organisation has been recording/transacting payments relating to Overtime as there will be special cases to be reported as overtime. These include:
Directors’ fees include payments to a director of a company, or to a person who performs the duties of a director of the company. In MYOB Advanced your pay items will need to be mapped to the ATO reporting category “Director’s fees”
CDEP values are no longer reportable.
Salary Sacrifice Amount
STP Phase 2 you must separately report salary sacrificed amounts. When reporting salary sacrificed amounts, there are two new types to report:
These options have been added to MYOB Advanced pay item ATO categories “Salary sacrifice super“ and “Salary sacrifice other“.
Lump Sum E
Lump sum E is an amount of back payment of remuneration that accrued, or was payable, more than 12 months before the date of payment and is greater than or equal to the Lump sum E threshold amount ($1,200).
MYOB Advanced has added the ability to capture the year for Lump sum E payments by:
Lump Sum W (return to work)
Not previously reported in STP, a “Return to Work” amount is paid to induce a person to resume work. These types of payments must be taxed as “Return to Work” payments and reported as Lump Sum Type-W YTD amounts.
MYOB Advanced supports this as follows.
Changes for those migrating to MYOB Advanced
Transferring Payee YTD amounts
In STP phase 1, payers, changing where your data was stored (software product, Company instance) or changing the employee’s employee code, resulted in an employee having multiple payment summary records with MyGov and YTD values being incorrect.
To help reduce and fix these issues, the ATO has added two new fields to STP:
MYOB Advanced has added:
Simplified batch statuses
Status descriptions for STP submissions have been simplified:
What's NOT changing?
The following parts of STP reporting won't change:
What do I need to do?
When you're ready to enable STP Phase 2, you need to review, update and validate your data. To help you complete these tasks, MYOB Advanced version 2021.1.4 adds a new STP Phase 2 tab to the Payroll Preferences screen that lists the tasks which need to be completed.
How can I find more information?
Looking for more details? If you’d like to find out more about how STP Phase 2 will affect your business, we’ll be running a series of webinars in the coming weeks to help guide you through the process. You can refer to the ATO’s employer reporting guidelines.
Keep an eye out for email updates for the latest on how the rollout stages are tracking. We’ll make sure you’re across what’s happening throughout the transition.
BusinessHub Pty Ltd provides support in relation to MYOB Advanced Payroll and MYOB Exo Employer Services, but we do not provide (and should not be relied on for) legal or accounting advice, so we recommend that you contact your professional advisor for this type of assistance.