Accountants: Why STP Phase 2 is good news for you and your clients
Learn more about the expansion of Single Touch Payroll (STP) and what it means for your clients.
Last month it was announced that mandatory reporting for STP Phase 2 will commence from 1 January 2022—six months later than initially planned. The news was welcomed by accountants, service providers, and employers alike who have all found themselves juggling new responsibilities this past year.
However, like all deadlines, the start of STP Phase 2 will be upon us faster than we think. Rather than put things on the backburner, now is the time to start thinking about compliance and looking forward to the benefits that STP Phase 2 will bring.
Here we break down what you and your clients should know about STP Phase 2.
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 employers to report additional information through STP on or before each payday.
This will ultimately reduce the compliance burden for employers 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, employers will no longer need to carry out the following tasks:
- 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
Benefits for employees are equally expansive and 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
As an accountant, the best way to prepare for STP Phase 2 is by talking to your service providers in the coming months and ensuring that they will be compliant. Now is also a good time to speak with your clients and ensure they understand the changes and how they will impact on their business and employees.
To help facilitate these conversations, download our simple guide to STP Phase 2 and the benefits for employers and employees.