What changes will the Mandatory Reporting of Single Touch Payroll (Phase 2) Bring?
The ATO initiative has been around for nearly two and half years to help employers establish real-time digital payroll reporting, including salaries, wages, PAYG withholding tax and superannuation information. With STP being rolled out in stages, some small businesses have been offered exemptions from the initial deadlines. That is, up until now.
Employers with any current concessions should have been reporting each payday through STP by 1 July 2021. Employers who have not yet started reporting through STP will need to begin reporting as soon as possible. The changes affect those with closely held payees and reporting concessions for other micro businesses and seasonal employers.
What is Single Touch Payroll (STP)?
STP is an Australian Government initiative to reduce employers’ reporting burdens to government agencies and assists them in streamlining the reporting of tax and superannuation information. Employees’ payroll information is reported each time the employee is paid on or before the payday through STP-enabled software. Payroll information includes salaries and wages, pay as you go (PAYG) withholding and superannuation.
All companies are required to use STP. STP was first introduced on 1 July 2018 for employers with 20 or more employees and 1 July 2019 for employers with 19 or fewer employees. Several concessions have been made available depending on business, industry, or employer types, most of which end on 1 July 2021.
Remind me, what does closely held mean?
Good question. According to the ATO, a closely held payee (otherwise known as a closely held employee) is an individual directly related to the entity from which they receive payments. For example, this would include relatives in a family business or beneficiaries of a trust fund.
Depending on working arrangements, some businesses process irregular or infrequent pay runs for family members on their books. That’s why, up until 1 July of this year, small employers (with 19 or fewer payees) have been exempt from STP reporting of closely held payees.
So, what’s changing with closely held payees?
By the end of FY21, employers with fewer than 19 employees will have to report closely held salaries or wages through STP. Whether it’s a sister, great-uncle, cousin or in-law, every family member on your clients’ books count. There are three payment reporting requirements to be aware of:
- Report and process payroll through STP on or before payday
- Report the accurate payroll amount with STP once per quarter, on or before the BAS due date
- Report a reasonable estimate with STP once per quarter, on or before the BAS due date
What is the mandatory start date for all employers to start using STP Phase 2?
The mandatory start date for STP Phase 2 reporting is 1 January 2022.
Micro businesses in each category may still be eligible for STP reporting concessions, such as quarterly or exceptional circumstances exemptions.
Head over to the ATO website for more details.