Why STP Phase 2 is good news for businesses and their employees
Learn more about the expansion of Single Touch Payroll (STP) and how it will save you time and effort.
Last month it was announced that mandatory reporting for STP Phase 2 will commence from 1 January 2022—six months later than initially planned. This was good news for many businesses who found themselves juggling several other new responsibilities this past year.
Like all deadlines, however, the start of STP Phase 2 will be upon us faster than we think. Now is a good time to familiarise yourself with what it will mean for you and your business’ employees.
What is STP Phase 2
The initial implementation of STP was a significant step in the digitisation of reporting from Australian businesses to government departments. STP Phase 2 will expand on this digitisation by requiring businesses to report additional information through STP on or before each payday.
This will ultimately reduce the compliance burden for businesses and individuals who currently report information to multiple government agencies. As stated by the ATO, it will also support the administration of the social security system.
Benefits of STP Phase 2
STP Phase 2 will help reduce duplication and streamline reporting which will be beneficial for everyone, including accountants, employers, employees, and government agencies.
For example, as an employer, your business will no longer need to carry out the following tasks:
- Completion and provision of Employment Separation Certificates for terminated employees
- Monthly completion and submission of child support deductions report
- Provision of employee payment summaries
- Provision of payment summary annual report to the ATO
- Sending of employee TFN declarations to the ATO
STP Phase 2 will also offer a raft of benefits for your business’ employees. These include:
- Reduced effort and error in calculating and reporting income for the purposes of income support payments
- Improved accuracy and timeliness of payments
- Greater visibility on how changes to income affect entitlements
- Reduced employment income related debts
- Increased equity in determining an individual’s capacity to pay debts
The additional data provided by STP Phase 2 will also assist the ATO and Services Australia with audit activities and help to further streamline business processes. For example, Services Australia will be able to better ensure income support recipients receive correct payments. It will also reduce the amount of paper forms processed and reduce the need to contact employers.
Preparing for STP Phase 2
While there is nothing that businesses need to do right now, you should talk to your accountant or payroll service provider in the coming months to ensure they will be compliant for STP Phase 2.
You can also download our simple guide to STP Phase 2 and keep this as a reminder of the benefits and 1 January 2022 deadline.
TAGS: Small Business Midsized Business Large Business Multinational Business HR Admin and Outsourcing Payroll Administration Risk and Compliance Payroll Compliance & Legislation Legislation Human Capital Management HR Finance Business Owner Infographic