Single Touch Payroll Phase 2 Advisory Group key messages 24 May 2022

Welcome and introductions

No conflicts of interest declared.

The Chair welcomed Genaya Dancey, Assistant Commissioner from ATO’s Enterprise Systems and Technology are who is responsible for Single Touch Payroll (STP) System Solutions.

Jason Lucchese provided some opening remarks. ATO has received feedback from STP Employer Transition Working Group that the small employer market is a difficult group to reach to ensure STP messaging and awareness is reaching the right levels.

There is a dependency that employers are relying on their Digital Service Providers (DSPs) for communications and support.

Information packs have been distributed to tax and BAS agents to assist them with conversations with their clients. The ATO are also looking to provide the same information to DSPs to assist them with their communications.

Industry scan

Members provided insights on what’s new and different in their environments including:

• All-purpose allowances and rolled up allowances are causing employer rework or additional payday work for no different outcome, that is, no impact on the employee. There is reluctance to change payslips and employee ‘gross’ pay makeup as employees won’t understand.
• Hearing that at least one DSP is advocating for a 1 July transition to STP Phase 2 and wanting to ensure adequate ATO call centre support would be available at this time.
• Agents would like a mechanism to know that the STP Phase 2 report is being received, the client list report does this.
• If ATO could share information on DSP readiness status, there is a sense that this would empower small businesses to self-service and understand what it means for their readiness.
• There was some feedback that the language in communication and correspondence.
• Some small businesses do not know what DSPs means. The terms ‘your payroll product is ready’ can also be confusing. Suggestions that we use payroll solution instead. There was recognition that DSPs need to take the lead to communicate about when their software is ready.
• Industry is concerned about the lack of guidance on the how to implement the changes to removal of $450 threshold particularly where they have employees that work less than 30 hours per week.
• Question was raised about employees not understanding their income statement post 1 July 2022, as their income statement may be a mixture of part allowances, part time allowances, part gross. Suggested the ATO could issue communications, directed to employees, which explains what their income statement might be made up of.

Digital service provider

Readiness and assurance

The ATO tabled a paper on DSP readiness and assurance noting:

• As of 24 May, 146 whitelisted. The ATO are anticipating a significant peak period for conformance testing over the next 2 to months.
• DSPs are encouraged to commence testing as early as possible to allow for issues resolution and customer transition. This includes production data for Go-Live Support assurances.
• Feedback on conformance testing has continued to be positive. We are minimising ATO delays as much as possible and have refined our communications to ensure the next steps in each process are clear.
• We have been talking to DSPs with a focus on product conformance, but also products that support their customers to report correctly. For example, product enhancements, customer guidance and customer communications, common reporting issues.
• We are continuing to capture and promote advice on common themes on errors experienced during extended conformance testing and in production, for example, employer pay code set up. This guidance information is available through Online services for DSPs.

Deferrals

ATO is continuing to monitor DSP readiness as deferral end dates approach and work closely with DSP partnership office to send out reminder letters where DSPs are not on track.

Employer transition, engagement and communications

ATO tabled a paper on employer transition engagement and communication noting:

• As of 24 May, the ATO has over 123,000 employers reporting STP Phase 2 data, which covers 1.4 million individuals.
• Based on the insights we have through DSP readiness and their customer transition plans, the forecasted on-boarding percentage for the end of July 2022 is remaining on track.
• Events and engagements continue to be a key focus. By the end of the financial year the ATO will have supported 70 events covering 25,000 attendees. May 2022 direct employer correspondence campaign. We are writing to all employers (which we did not already write to in November or February) to raise awareness and ensure employers know that STP Phase 2 is here and that they should be preparing.
• Correspondence has issued to approximately 550,000 to 600,000 employers.
• We are now preparing to support a number of end of financial year events, where getting ready for STP Phase 2 reporting is the primary key message from the ATO.

Future communications plan

The ATO is expecting to write to employers again in August to nudge those who have had a product ready for some time but have yet to come on board.

Another letter will issue to employers whose solution is going to be ready soon or have DSP deferrals expiring in the coming months.

The ATO will record 9 video series a to help address common reporting questions and themes. We have commenced development and planning of a reporting help page with an associated video series. Examples of topics to be covered include:

• reporting of allowances
• principles
• allowance type other (OD)
• all-purpose allowances
• the relationship between Salary Sacrifice and reportable employer super contributions
• paycode/category set up
• country codes.

These videos and content will be finalised shortly and promoted throughout June 2022.

ATO are also updating the employer guide around some allowances which will be publish in the coming weeks.

Outcomes from April roundtable

Industry round table discussions were held on the 27 April, to discuss feedback that awareness of STP Phase 2 was lower than expected in the small employer segment.

The session confirmed the ATO’s communication and guidance was working well and that the tax agent client list was really helpful. ATO is considering when they might issue another tax agent client readiness list.

ATO continues to work through other ideas and suggestions discussed at that roundtable and will keep stakeholders informed of progress.

Single Touch Payroll policy update

ATO tabled a paper on reporting of apprentice payments through STP. It is recommended the group note that:

• The ATO is taking steps to streamline reporting of certain payments to apprentices by transferring them from the payment summary system to STP.
• In support of this, a draft legislative instrument will be released outlining amendments to the existing Single Touch Payroll – Amounts to be Notified Determination 2021
• There are no changes to the existing STP obligations or reporting framework that will result from this, however members were made aware in case release of the draft legislative instrument prompted questions from their communities.