Single Touch Payroll Phase 2: What to expect
Single Touch Payroll (STP) left the Australian payroll world abuzz in the past year, with how it changed the way business reported their payroll information to the Australian Taxation Office (ATO). By 1 July 2019, all businesses across Australia should be compliant to STP regardless of their total headcount, requiring huge efforts from employers and payroll solutions providers to work together to prepare their payroll data and ensure their payroll systems are STP-enabled for smooth compliance.
Now that the legislation is in place, what’s next? While we have yet to see some specifics on what is in store in the next phase of STP, the ATO recently held some sessions to share updates about STP changes that employers and payroll providers should keep in their radar.
New Data Type Reporting
The first phase of STP reporting included high-level data such as Gross, Tax, Allowances, Deductions, Lump Sums and Fringe Benefits. The next phase sees the reports moving away from Payment Summary Annual Rules (PSAR) and Payment Summaries for allowances and deductions to “Income Types.” This presents a change in the structure of the XML file that payroll providers had previously mapped, to provide a more robust model to adapt to the new report.
Other payments will likely be separately reported as well, to include a more detailed data reporting: Country Income, Salary Sacrifice, Bonuses and Commissions, Overtime, Directors’ Fees, Paid Leave (including Leave Payment Type and OTE status), and Deductions (including Type, Amount and Variation Reason). Reportable Fringe Benefits will see some changes, too; where instead of reporting the RFBA Taxable Amount and the RBFA Exempt Amount, ATO will require RFBA Exemption Status and RFBA Amount.
These changes may mean reworking some rules written to cater to Phase 1 requirements, and employers will need to champion their data and team up with their payroll providers to simplify and streamline their STP Phase 2 journey.
Whole of Government
The report enhancements and improvements in Phase 2 is to set up the Whole-of-Government approach. Besides the ATO, different government agencies may now request access to the payroll data submitted for use in their own processes. Agencies who will get first access are Child Support Agency (CSA), Department of Social Services (DSS), Department of Human Services (DHS), and Department of Veterans Affairs (DVA), with child support payments set to be included in STP reporting by 1 July 2021.
This means that payroll data submitted via STP may now affect the decisions made by these government agencies in delivering their services. As such, data accuracy and integrity are now even more important, with its potential to affect the rest of the country.
What to expect
The ATO will be providing more information to payroll providers and employers in the next months, including a draft data structure, schema and validation rules. A new version of the Business Implementation Guide (BIG) is targeted for release by January 2020, followed by a BIG review by June 2020. Early preparation and knowledge is key as we enter this new phase in the legislation, so keep informed by watching out for ATO updates, subscribing to The Association of Payroll Specialist (TAPS) newsletter, communicating regularly with your payroll providers. STP Phase 2 is expected to go live by 1 July 2021.