2 March 2023
by Susan Cass & Heather Hilton
- Related topics
- Corporate Tax & Regulatory
Since 1st July 2018, employers have been reporting payroll and superannuation information to the ATO on a real-time basis through Single Touch Payroll (STP). In the 2019–20 Budget, the Government announced STP Phase 2 with additional information required.
The ATO deadline to be Phase 2 compliant was1st January 2022. However, some payroll solution suppliers, for example Xero, negotiated an extension to this deadline. Xero was granted a deferral due to COVID, until 31st March 2023 for employers to report their first STP Phase 2 pay run.
Under STP Phase 2, the Australian Government requires all employers to report additional information through STP on or before each payday. This information will include details such as an employee’s employment or income type and the reason for any cessation of employment.
It is timely for all business owners with employees to check that they are STP Phase 2 compliant.
If you are a Xero customer, there are actions an employer needs to take to transition to the new STP Phase 2 reporting requirements. If you are a Xero customer and are yet to transition, here are some helpful tips on what you need to do.
- Update employee records with:
- Employment type
- Income type
- Employment basis
- Tax scale
- Replace earning pay items – you need to assign ATO reporting categories to your existing earnings pay items.
- Update leave pay items – you need to assign a leave category to each of your active leave pay items in your organisation.
For ESV outsourced CFO clients who use Xero we have completed the required updates for you.
If you do have any questions on STP Phase 2, don’t hesitate to reach out to your ESV Engagement Partner.