The latest in these requirements is an update in something called STP.
What Is STP?
Single-Touch Payroll (STP) is an Australian government initiative that affects how businesses report payroll information to government authorities. As of July 2019, it is mandatory for all Australian businesses to use STP.
The initiative allows employers to report payroll information to the Australian Tax Office (ATO), eliminating the need to produce extra reports and statements at the end of the financial year.
By combining the processes of payroll and reporting, STP means employers can do both with a single touch - hence the name.
Introduced in 2 parts, STP ‘Phase 1’ was made mandatory in July 2019 for all employers.
Phase 1 enabled employers to report information about:
- salaries/wages
- PAYG withholding
- superannuation.
What Is New In STP?
As per the ATO, phase 2 of STP will reduce administration time even further by allowing employers to report:
- Tax Information (such as Tax File Number (TFN) Declarations & Tax Treatment Codes)
- Salary Sacrifice
- Lump Sum E Letters
- Negative YTD Amounts
- Previous Software/Payroll IDs (when switching software provider)
- Child Support Garnishee/Deduction Amounts (if applicable)
- Income Type and Country Codes
- Disaggregated Gross Earnings (in line with different income assessments)
- Mandatory reasons for termination of employment
- Salary Sacrifice contributions can no longer be used to reduce ordinary time earnings or count towards minimum superannuation earnings
In order to conduct single-touch payroll, you must be using STP-enabled software, such as erly. Provided you have all of the information, your software will report everything to the ATO on your behalf.
Powered by KeyPay, our payroll platform is already prepared for Phase 2 of STP. Whilst some platforms have asked for a deferral on producing the necessary features, erly is primed to have you STP-compliant in 2022.
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