Single Touch Payroll Phase 2 Advisory Group key messages 11 August 2021

Industry update

Members shared the following insights:

• Things are generally quiet with regards to transition to single touch payroll (STP) Phase 2. It is not a current focus for employers who are fatigued and heavily committed with other government measures.
• It is a balancing act to engage business without being insensitive of the current environment.
• There are a number of businesses that will not be ready to report STP Phase 2 data from 1 January 2022 and there needs to be some messaging to support these employers.
• Digital service providers (DSPs) are not expecting to be in a position to transition to STP Phase 2 until mid-2022 and envisage new clients will come on board from the new financial year 1 July 2022. Bookkeepers are also not expecting significant engagement until their DSPs are ready.
• DSPs are waiting on specifications for Your Future, Your Super, expected late 2021 which will impact on DSPs.
• Members are not anticipating COVID-19 restrictions to lift until November 2021 and Small Business are not thinking about new obligations whilst so much uncertainty remains.

DSP readiness and transition

The following points were noted, as of 31 July 2021:

• Ninety one DSPs were registered for external vendor testing environment covering 112 products.
• Thirty nine DSPs have registered for external conformance testing (ECT).
• Average time to move through testing environment is approximately 6–8 weeks. It is anticipated that the ATO will have a better understanding of the true timeline for testing as we progress with readiness and transition activities over the next couple of months.

ATO will be hosting a DSP webinar on 26 August 2021 to re-engage the DSP community. Topics to be addressed include insights from ECT and deferral processes for DSPs and employers.

If a deferral is required, DSPs are encouraged to submit their deferrals as soon as possible. Industry was keen to understand if ATO could share information about DSP deferrals and dates on ato.gov.au.

The practitioner market would also like to understand the process for agent practice deferrals. They did not expect that they would be able to transition all their clients on the one date. ATO acknowledged the impact on practitioners and would be undertaking further discussion to provide support required.

Employer engagement

There has been a great response and support from industry for the upcoming webinars which will be supported by Fair Work Commission and Services Australia.

Industry is keen to understand how STP Phase 2 data will be used by Services Australia including:

• Understanding the flow on impacts for employees where incorrect information is reported or payroll information is processed incorrectly. How does this affect child support and other benefits paid by Services Australia?
• Is there anything tax practitioners can do to withdraw or correct STP Phase 2 data that is reported.

ATO provided an overview of the high-level engagement plan. Feedback from the group included:

• No radio silence from ATO in December, industry will need support during this time.
• ATO need to have clear advice and a communication plan for employers/businesses on how to better prepare for STP Phase 2, rather than just rely on advice to DSPs.

Industry also asked for the employer guide and communications to be simplified as the existing content was too long/technical for employers to understand.

Phase 2 employer deferral messaging

ATO provided an overview of the deferral processes for Phase 2. Employers will be able to apply for a deferral to commence reporting through Phase 2 and an online deferral tool will be made available later in the year.

Consultative group update

Key points from the recent STP Employer Transition Working Group include:

• Similar conversation and concerns were raised as to what has been discussed today.
• Tax practitioners reported limited questions or engagement from employers around STP Phase 2 due to tax time activities. STP Phase 2 was not a priority at this time.
• More transitioning, benefits and deferral messaging is needed from the ATO, lifting up to a whole of government level. This needs to be balanced with the right information at the right time

Key points from the recent STP Phase 2 Digital Service Provider Transition Working Group include:

• Similar areas of concern as those raised by members of this group.
• Questions focussed on the needs of the employers, the what, why, how, and when employers need to do, to better prepare for STP Phase 2.

Other business

Industry noted the Your Future, Your Super and stapled funds work being undertaken and asked the ATO consider the linkages to Phase 2 as both are a change to an employer’s payroll processes.