Single Touch Payroll Phase 2 Advisory Group key messages 21 February 2022

Industry update

Members provided the following insights and feedback:

• An agreement that there is some complacency from some small businesses with the belief that the software will be the solution. Messages that are being provided to business may not be enabling them to understand what is necessary.
• Question from clients around allowances and how to record them has increased. Software should provide a mapping tool. Further clarity by examples was suggested in the employer guides.
• A balance needs to be found around providing the correct single touch payroll (STP) information at the right time without scaring people.
• It was noted that awareness of STP and training settles a lot of nerves.
• Products have started to be whitelisted and there is a lot of work to be completed to finish the products.
• Encouragement for business to use the existing pathways with advisors for support. Support for advisors needs to be continued.

Digital service provider readiness and assurance

ATO tabled a paper on digital service provider (DSP) readiness and assurance noting:

• Expectation is that numbers of products whitelisted will ramp up from February 2022 with the peak in March–May 2022.
• Testing and deferral dates will be assessed on a month by month basis. These will be tracked as they go through the conformance process.
• ATO are providing additional Go-Live Support for initial STP Phase 2 production reporting with a payroll product. ATO recommend that a single client/employer commences reporting initially.
• The main issues identified in conformance testing include the disaggregation elements of allowances, salary sacrifice and lump sums.
• The common themes have been captured and help and support material is in development for publishing in online services for DSPs.

Digital service provider deferrals

DSPs who need additional time to update their solutions have accessed deferrals.

The Digital Partnership Office undertook call campaigns to contact DSPs who have deferrals until March 2022 that had not commenced external vendor testing environment or external conformance testing.

ATO are continually monitoring DSP readiness and sending reminder notices to DSPs in advance of deferral expiry dates.

Communications to the agent or business – The group commented that their preference was to follow the existing pathway of sending communications through intermediaries before going directly to business.

Employer engagement and communications

The ATO tabled a paper outlining the approach to employer engagement and communications noting:

• ATO are encouraging employers whose product is ready to start reporting if they can and are working with a number of DSP’s regarding the appropriate timing of our communications and engagement with their clients.
• An online employer deferral application process opened on 6 December 2021 for employers who need more time to transition.
• End of year events are expected to increase in May and June.
• A practitioner focus group was held to provide an opportunity to explore providing additional tailored engagement and readiness support for practitioners. As an outcome of these meetings checklists will be provided in March with their Phase 1 and Phase 2 status.
• Engagement with large employers focusing on understand their readiness and identify specific issues related to large and complex payrolls.
• Engagement with small employers continues as they prepare for roll out.
• There is still confusion around closely held entities and superannuation and how we move them into STP. We need information around lodgment based on ordinary time earnings or voluntary compliance.
• A year-end review of closely held will be done at year end.
• Larger employers are concerned about
  • certificate of coverage
  • senior executive on temporary visas
  • employees who have a valid superannuation exemption
  • non-resident directors, pay as you go and superannuation.
   

Consultative group update

There was agreement that the DSP Transition Working Group meetings will not continue monthly, instead they will continue on an ad-hoc basis and the Employer Transition Working Group meetings meeting will occur every 6 weeks.