Single Touch Payroll (STP) which was rolled out on 1 July 2018 revolutionised payroll reporting, making it easier for employers to report their employees’ payroll information to the Australian Taxation Office (ATO). ATO STP is essentially Digital Payroll Reporting and was introduced in multiple phases, with Phase 1 and Phase 2 being significant milestones. In this blog, we will explore the differences between STP Phase 1 and STP Phase 2 for Australian employers, helping you stay compliant and efficient in managing your payroll responsibilities.
STP Phase 1: Recap
STP Phase 1 was rolled out during FY 2019 and applied to businesses with 20 or more employees. It aimed to streamline payroll reporting by requiring employers to report specific payroll taxation information to the ATO each time they run their payroll. Here’s a recap of the key features of STP Phase 1:
- STP Reporting Frequency: Employers had to report their payroll data to the ATO every time they paid their employees.
- Key Data Elements: Employers needed to report various payroll details, including employee salaries, wages, PAYG withholding, and superannuation contributions.
- Employee Commencements and Terminations: Employer Reporting needed to include when employees commenced or ceased their employment within a specific timeframe.
- Real-time Payroll reporting: STP Phase 1 provided the ATO with real-time access to payroll information, improving the accuracy of data and compliance enforcement.
STP Phase 2: The Next Evolution
STP Phase 2 came into effect from 1 January 2022. It extended the STP Reporting requirements to all employers, regardless of their workforce size and introduced a number of changes compared to Phase 1:
- Expanded Reporting: STP Phase 2 requires employers to report additional information, such as employee deductions, allowances, and employer contributions to superannuation funds.
- Employee Self-service: Employers must offer their employees access to their payroll information through a digital service, empowering employees to view and confirm their pay details.
- Employee Year-to-Date Information: Employers need to provide employees with year-to-date payroll data, making it easier for employees to track their earnings and deductions.
- Simplified Reporting for Small Employers: Small employers (those with one to four employees) have the option to report on a quarterly basis instead of each payday.
- Transitional Provisions: Employers were given time to transition to STP Phase 2. They were required to commence reporting by specific dates depending on their size and type of entity.
Key Differences between Phase 1 and Phase 2
Understanding the differences between the two phases is crucial for staying compliant with ATO STP and ATO Reporting obligations.
- ATO Reporting Requirements: Phase 1 applied to businesses with 20 or more employees, while Phase 2 extended the reporting obligation to all employers, regardless of size. Small and even micro businesses are now required to use STP approved software to comply with the ATO requirements to lodge payroll and superannuation information.
- Reporting Frequency: Phase 1 required reporting with each pay cycle, whereas Phase 2 offers quarterly reporting for small employers as an option.
- Data Elements: Phase 2 expanded the data elements to include more payroll-related information, allowing for a more comprehensive view of an employee’s financial situation.
- Employee Self-service: Phase 2 introduced the requirement for employers to offer employees access to their payroll data through a digital service.
- Year-to-Date Information: Employers are now required to provide year-to-date payroll information to employees, enhancing transparency.
Proven software like GovReports Savvy Employer and our IAM STP Reporting module make payroll processing and STP for Employers as well as STP for Small Business, much easier. All GovReports modules are cloud based and subscription fees include free telephone support and video training. The easy to use apps make a Single Touch Payroll Data Integration with other payroll apps a breeze plus the rich feature-set includes TFN Declarations and generation of Employee Payment Summaries making GovReports a great choice for Bookkeepers, BAS Agents and Accountants.
1. Choose GovReports as your STP Software Provider
The first step is to select GovReports as your preferred software provider for STP reporting. GovReports offers a user-friendly interface and comprehensive features that make the reporting process efficient and hassle-free.
2. Create an Account
Once you’ve chosen our platform, visit their website and create an account. Provide all the necessary details and follow the registration process. Make sure to enter accurate information to ensure a smooth setup.
3. Set Up Your Business Profile
After creating an account, you need to set up your business profile with our platform. This step involves entering your business details, such as your Australian Business Number (ABN), address, and contact information. Double-check the accuracy of the information before proceeding.
4. Connect to Your Payroll Software
To streamline your STP reporting, GovReports allows integration with various payroll software solutions. Connect your existing payroll software to GovReports to ensure seamless data transfer and accurate reporting. If you don’t have payroll software yet, We provide an option to manually enter your payroll data.
5. Set Up Payroll Categories
Configure your payroll categories within GovReports to align with your existing payroll system. This step ensures accurate reporting of employee wages, taxes, and other relevant payroll information. GovReports provides a user-friendly interface to help you easily set up these categories.
6. Test and Validate
Before submitting your STP reports to the ATO, it is crucial to test and validate your data within GovReports. This step ensures the accuracy and compliance of your reports. We offer validation checks to highlight any errors or inconsistencies in your data, allowing you to rectify them before submission.
After completing the setup and validation process, you’re ready to start reporting your payroll data to the ATO through GovReports. Generate the required reports within the platform and securely transmit them to the ATO. GovReports simplifies the reporting process, making it quick and straightforward.
Talk to us if you’d like to learn more about transitioning to the new reporting system for your business and get started today.
The GovReports Help Centre provides further resources including links to training videos, user manuals as well as support email and phone details.
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