Single Touch Payroll Phase 2 Advisory Group key messages 29 March 2022

Welcome and introduction

The Chair opened the March meeting. There were no conflicts of interest declared and draft minutes from the February meeting were accepted.

Industry update

Industry members provided the following industry insights and feedback:

• Some small digital software providers (DSPs) were finding the transition to Single Touch Payroll (STP) Phase 2 hard going and expressed concerns about the complexity of what was involved.
• Challenges continue to be faced with data associated with understanding Fair Work obligations and interpretation.
• Some DSPs with whitelisted products had begun to transition their clients onto STP Phase 2. However, most envisage that there will be a large number of clients to be onboarded in the lead up to December.
• From a superannuation fund perspective, STP was not high on the agenda. Although, some funds were showing more interest in STP from a data breach or identity theft perspective, especially given the increase in granular data that was now flowing through the system.
• Members discussed difficulties experienced by small business struggling to keep their business afloat whilst also attempting to keep up with broader changes.
• The Australian Small Business and Family Enterprise Ombudsman who normally deal with disputes and complaints advised that they had not received many enquiries. This could signal the lack of engagement and potential for further delays with conformance.

ATO discussed the recently announced budget measure where ATO is working on sharing STP data with state and territory revenue offices. This measure was being led by the Department for Prime Minister and Cabinet and is currently in design phase to confirm the data elements required by states and territories to facilitate the measure.

Digital service provider readiness and assurance

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

• ATO were seeing an increase in volumes of STP data being reported and were expecting to have an additional 18–30 products whitelisted by the end of the month.
• Feedback has been quite positive with DSPs reporting that it was more cost effective to identify and fix issues prior to being whitelisting. It was also more beneficial to have this completed before their clients began reporting through the system.
• There have been some ongoing indications that DSPs had underestimated the time it would take to have their product ready and whitelisted which is often around 6–8 weeks, as well as customer transition.
• ATO was providing additional Go Live Support for payroll products coming on board. We recommend a single client or employer commence reporting initially to identify any potential issues.
• Common themes of issues identified during conformance testing include disaggregation elements of allowances, salary sacrificing and lump sums, and incomplete set up of pay codes.

The ATO continues to monitor DSP readiness and provide proactive support and reminder notices to DSPs in advance of deferral expiry dates.

ATO is also trying to position additional support requirements for peak periods and increase in clients onboarding. Members suggested an indicator through the online services portal that showed what actions were outstanding for a particular client could be beneficial. For example, outstanding BAS, non-conformance with STP Phase 2.

Employer transition engagement and communications

ATO tabled a paper on Employer Transition Engagement and communications and transitions noting:

• Client lists have been sent to all tax and BAS agents with employer clients outlining their STP Phase 1 and Phase 2 status. A fact sheet and employer checklist has been developed, with the support of a small practitioner focus group and tested with number of stakeholders.
• To increase awareness amongst small employers, the ATO is proposing to hold a round table with industry and will seek nominations for membership from ATO stewardship groups. Intent will be to work through options to support and increase awareness of STP Phase 2 in the small segment.
• ATO are seeing some software products beginning to deploy their changes progressively in stages.
• Tax professionals play a critical role to advise their clients – often their clients need support and advice beyond STP Phase 2, rather about their underlying Fair Work obligations and payroll processes.
• Communications and engagement activities over the next 2 months will focus on steps that employers need to take to prepare.

Consultative group update

The DSP working group has now moved to be brought together on an as needed basis given the stage of delivery the program is at.

Other business

ATO to follow up with members on feedback regarding sharing of information with state and territory revenue offices.

ATO will also look to invite a representative from Fair Work to participate in small employer round table discussions.