In the 2019–20 Budget, the government announced that Single Touch Payroll (STP) would be expanded to include additional information.
The expansion of STP, also known as STP Phase 2, reduces the reporting burden for employers who need to report information about their employees to multiple government agencies. It helps Services Australia’s customers, who may be your employees, get the right payment at the right time.
To support you, our approach to STP Phase 2 is flexible, reasonable and pragmatic based on your business readiness and individual circumstances.
Digital service providers (DSPs) who need more time to make the changes and update their solutions to support STP 2 can apply for a deferral for their customers. If your DSP has a deferral, they will let you know.
If you can start reporting by your DSP's deferral date, you don't need to apply for more time.
If you need more time to transition to STP Phase 2 reporting, you can:
- apply for more time past your DSP's deferral date
- have your registered agent apply for more time on your behalf.
For more information about applying for a delayed transition, see STP expansion (Phase 2) delayed transitions.
There won't be penalties for genuine mistakes in your first year of STP Phase 2 reporting.
We'll use the STP Phase 2 information to streamline employer interactions. For example:
- You'll no longer have to send us your employees' tax file number (TFN) declarations. Your employees will provide it to you, and you'll need to keep it with your employee records.
- If you're using a concessional reporting option, such as for closely held payees or for inbound assignees, you'll be able to tell us through reporting income types.
- If you make a Lump sum E payment, you won't need to provide Lump sum E letters to your employees. You'll have included the amount and the period it relates to.
- If you change software or your employee’s payroll ID, you can tell us in your STP report if your solution has this functionality. This will help fix issues with duplicate income statements for employees in ATO online services through myGov.
We'll also share payroll information you report to us in near real-time with Services Australia. They'll use it to streamline requests:
- for you to provide or confirm employment and payroll information about your employees
- from your employees to provide employment and payroll information such as pay slips for prior periods.
You may no longer need to provide separation certificates when your employees leave. The date and reason an employee leaves will be in your STP report.
You can also voluntarily report child support deductions or garnishees (or both) through STP. This reduces the need to send separate remittance advices to the Child Support Registrar.
Some changes under Phase 2 help us streamline interactions for employees, such as:
- Making it easier for employees at tax time now we have better visibility of the types of income received and where it should be pre-filled on their individual income tax return.
- Over time, the new information reported will allow us to tell employees if they've provided you with incorrect information that may lead to them getting a tax bill. For example, where an employee hasn’t notified you that they have a study and training support loan.
We'll also share STP information with Services Australia so they can streamline interactions with their customers. Over time, they'll use STP data to improve their services by:
- pre-filling details they already know – saving their customers time filling out claims and reports
- reducing how often they'll need to contact customers – STP will give them some information that they currently need to confirm by phone or online
- streamlining claims – their customers won’t need to supply as many documents
- enhancing Family Tax Benefit processes – by sending SMS and email messages to their customers when
- STP data shows their family income estimate may be too low
- they have a new job
- their employment has changed.
- helping them pay their customers the right amount
- using STP information to improve the customer experience if a customer has debt to pay. STP information allows Services Australia to understand their customers’ recent employment and income history – this helps them assist customers to repay any money owed.
The STP Phase 2 employer reporting guidelines outline what is required for reporting through your STP Phase 2-enabled software.
For more information about STP Phase 2 reporting, see:
- Employer STP Phase 2 checklist
- Tax and BAS professional STP Phase 2 checklist
- Mandatory reporting under STP.
While you'll need to report additional information in your STP report, there are many things that will stay the same, such as:
- the way you lodge
- the due date
- the types of payments that are needed
- tax and super obligations
- end-of-year finalisation requirements.
Most of the additional information you need to report should already be captured in your current payroll software.
The key changes to the STP report include:
- Disaggregation of gross
- Employment and taxation conditions
- Income types
- Country codes
- Child support
- Business Management Software IDs and Payroll IDs
Your STP report currently includes a gross amount. This is the total of many different components and payment types. Because some of these are treated differently for social security purposes, you will now need to report more detail.
There are many factors that influence how you manage your employees in your payroll. These include:
- their employment basis
- the information on their TFN declaration
- details of when and why they leave.
You currently provide this information in different ways and on different forms.
Phase 2 streamlines this process by including the information in your STP report.
You already tell us about the type of income your employees receive in your STP report.
The reporting of income types introduced in Phase 2:
- identifies payments you make to your employees with specific tax consequences
- makes it easier for them to complete their individual income tax return
- helps us identify where you are using a concessional reporting arrangement.
Sometimes you'll need to report a country code. For example, if you make a payment to an Australian resident working overseas, you'll need to provide information about the host country.
You'll have the option to include child support garnishees and deductions in your STP report. This will reduce the need to give separate remittance advices to the Child Support Registrar.
This is optional and not all STP-enabled solutions will offer this functionality.
You may have the option to provide us with previous Business Management Software IDs and Payroll IDs in your STP report. This might occur when you've changed your business structure or changed software and can't zero out or finalise previous records.
Providing this information will help us reduce and fix issues with duplicate income statements for employees in ATO online services.
This is optional and not all STP-enabled solutions will offer this functionality.Single Touch Payroll Phase 2 will streamline reporting information about employees to government agencies.