Single Touch Payroll Phase 2 Advisory Group key messages 5 July 2022

Welcome and introductions

No conflict of interest declared.

The chair opened the meeting and welcomed members.

Transition arrangements for the STP Program

The chair advised that the ATO has now closed Single Touch Payroll (STP) as a program but will continue to manage the transition to STP Phase 2 as well as the state and territory prefill pilot as part of business as usual projects.

In recognition of our ongoing role as custodians of STP data and its enduring support functions, an employer data centre will now sit under Melanie Casey as the acting Assistant Commissioner for Data and Services within the Superannuation and Employer Obligations business line.

Digital service provider readiness and assurance

The ATO tabled a paper on digital service provider (DSP) readiness and assurance noting as of 31 May 2022:

• 155 DSP products have been whitelisted for STP Phase 2. 113 of these products have customers, employers that have commenced STP Phase 2 reporting.
• 30 DSP products were whitelisted for STP Phase 2 in May 2022.
• 86 products have commenced extended conformance testing (ECT), not including those already whitelisted, so ATO is anticipating the peak period to continue for at least the next couple of months.

The ATO continues to support DSPs preparation and promote common themes and learnings through online services to DSPs. The current focus is managing the peak period and minimising delays for ATO response to STP Phase 2 ECT submissions, as well as go-live support for initial production data. We are also prioritising any tax time relevant issues for STP Phase 2.

Currently approximately two thirds of products involved in ECT and still just under half of employees are being reported through STP. Industry asked the ATO to consider and set clear expectations about the potential for further slippages to onboarding beyond December 2022.

In transitioning to business as usual, STP Phase 1 systems will continue to be supported for old data or corrections associated with pay event 2018. Whilst the system is expected to be available for a while, developer capability will be removed from that system and the ATO will provide validation/error messages should DSPs attempt to send information through the old system. ATO will consider what additional messaging is required for DSPs.

Employer transition, engagement and communications

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

• As of 21 June 2022, over 160,000 employers covering more than 2 million individuals are reporting through STP Phase 2.
• ATO is expecting a significant onboarding period during July and we continue to provide guidance through the updated employer guide.
• ATO has undertaken a number of speaking engagements with prominent DSPs, payroll and professional industry associations and key agents.
• To help address common issues seen in production, the ATO has developed a new STP Phase 2 reporting help web page which is expected to be published in early July 2022. This enhanced web content will be accompanied by 9 short topic-based videos.

Communication plan

The communications plan for August is to send tailored correspondence to 3 groups of employers:

• First nudge/reminder issued to all employers whose product is ready and are not covered by a deferral and have not transitioned.
• Get ready reminder issued to all employers whose product is ready and are still covered by a deferral.
• Call to action for employers whose product is not being updated to offer Phase 2 reporting.

Member suggestions

• ATO to continue with the existing approach and softer language given the focus of overall pressures and priorities being managed by DSPs and employers.
• ATO may want to sell the benefits and positives of going early/now.
• Come August, the ATO should continue softly but use stronger/firmer messaging about the December due dates.
• Members also recommended further liaison with the tax practitioner area to coordinate correspondence to agents.

Member comments

Feedback from the STP Employer Transition Working Group is that the proposed language needs to be firmer.

Members enquired about intended recipients for the nudge letters. The ATO confirmed that we utilise communication preferencing of the employer, in most cases correspondence will be sent to one of the agents. ATO also confirmed we have recently written to the Top 100 chief financial officers to reinforce the STP onboarding message.

Members were invited to forward any additional feedback on proposed communications through the Single Touch Payroll Phase 2 Advisory Group secretariat team.

Members also queried the status of the work underway on mapping of allowances with Fair Work and suggested there was ongoing confusion about whether to disaggregate allowances. ATO confirmed that work was progressing to document scenarios on the recommended approach for allowances and has been included in the latest version of guidance on our website.

State and Territory prefill pilot

ATO provided an update on the scope of the state and territory prefill pilot noting;

• The pilot is a deregulation measure that is being led by the Department of Prime Minister and Cabinet (PMC) and supported by ATO. The focus is what deregulation benefits they can achieve.
• The ATO is currently provisioning data to 5 states – NSW, QLD, SA, VIC and WA (3 not participating in the pilot), supporting them to understand the datasets and work through any issues.
• The data is not being actively used with outbound clients of states and territories.
• PMC have engaged PricewaterhouseCoopers to conduct focus groups, liaise with stakeholders to document the qualitative and quantitative benefits from sharing the data. Feedback so far has been positive.
• The ATO confirmed that we are not expecting to disrupt the existing implementation of pay 2020 event information. The pilot will conclude in September 2022.

Consultative Group update

The last meeting of the STP Employer Transition Working Group discussed the proposed communication and correspondence plan.

ATO will be undertaking a review of membership for the STP Employment Transition Working Group to ensure we have adequate representation of agents and DSPs.

ATO will write to members with further information about the purpose and scope of this group so industry can put forward appropriate nominations.

Industry Scan

Members provided insights on emerging issues including:

• One of the gaps in end of year reconciliation processes is knowing exactly what has been reported to the ATO. Finalisation processes are difficult, the existing CSV file is not a simple report and requires significant analysis to interpret. Some organisations produce a summarised report on information reported to ATO however this is not consistent practice.
• Employers need to look at errors returned including partial success. ATO to consider if there is adequate messaging and feedback loops with DSPs, including potential flow on consequences for getting the data wrong, for example, impact on Services Australia payments.
• There is a potential discrepancy between the employer statement and the information they view through myGov and the issue potentially lies with employers’ understanding of their obligations.
• An issue occurring with agent linking. The ATO is currently undertaking a pilot with the Top 100 taxpayers, Top 1,000 businesses whereby a new process is being trialled to require a client to grant an agent permission to add them as a client. Communications were sent to impacted entities and agents. Member feedback is that the ATO should consult with industry to design