The Australian Taxation Office (ATO) has announced that it will be deferring the start date for the Single Touch Payroll (STP) expansion which was intended to commence from 1 January 2022. Under the STP expansion – Phase 2, employers are required to provide additional information as part of the STP lodgement process.
Phase 2 Reporting
As part of Phase 2 reporting, the following are some additional reporting requirements:
- Disaggregation of 'gross' salary – Currently, employers report gross salary as part of STP. Under Phase 2, employers will be required to report the components of gross salary which includes gross salary, paid leave, allowances, overtime, bonuses and commissions, director fees, lump sum W payments and amounts salary sacrificed.
- Employment and taxation conditions – Employers will need to report the following:
- Employment basis (fulltime, casual, part time etc.)
- Information on the employee's TFN declaration. It is expected that in most instances you will no longer be required to lodge TFN declarations with the ATO if reporting through STP Phase 2. New employees however, will still need to complete the TFN declaration which needs to be kept in your records.
- Details of when and why employees leave employment.
- Income types – Employers will need to report to the ATO whether their employee's income is subject to special tax treatment (e.g. working holiday makers) or concessional reporting arrangements. Employers will need to assign an income type to payments made to employees.
- Country codes – Employers will need to provide country codes where they make payments of certain income types to their employees. This includes foreign employment income, inbound assignees to Australia, and working holiday makers.
- Child support garnishees and deductions – Employers will have the option to report child support garnishees and deductions.
Digital service providers (DSPs) can apply for a deferral for their customers. If your DSP has received a deferral, they will let you know and you can start reporting by your DSP's deferral date. If this is the case, you do not need to apply to the ATO for more time.
It is recommended that if your solutions are ready by 1 January 2022, you start Phase 2 reporting. As long as you start reporting by 31 March 2022, you will be considered to be reporting on time and you do not need to apply to the ATO for additional time.
If the DSP solution is ready, but you need more time to implement Phase 2 reporting, you can apply for more time past your DSP's deferral date. More information in relation to deferral applications will be made available soon - it is expected that the ATO will start accepting the applications from December 2021. The ATO has stated that you will not incur any penalties for genuine mistakes for the first year of Phase 2 reporting until 31 December 2022. This includes employers who have already started Phase 2 reporting.
This article is issued as general commentary - please contact us about your specific circumstances.