STP Phase 2 rollout

In the 2019–20 Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information.

The expansion of STP, also known as STP Phase 2, would reduce reporting burden for employers who need to report information about their employees to multiple government agencies.

The mandatory start date for Phase 2 reporting was 1 January 2022 however many payroll software providers, including Xero, have an extension of time with a deferral of start date until 31 December 2022.

Benefits for employers and employees

For employers, this means:

  • You’ll no longer have to send your employees’ TFN declarations to ATO. Your employees will provide it to you, and you’ll need to keep it with your employee records.
  • If you’re using a concessional reporting option, such as for closely held payees or for inbound assignees, you’ll be able to tell us through reporting income types.
  • If you make a Lump Sum E payment, you won’t need to provide Lump Sum E letters to your employees. You’ll have included the amount and the period it relates to.
  • If you change software or your employee’s payroll ID, STP Phase 2 will be able to avoid duplicate income statements for employees in ATO online services through myGov.

Payroll information you report to the ATO will also be shares in near real-time with Services Australia. They’ll use it to streamline requests:

  • for you to provide or confirm employment and payroll information about your employees
  • from your employees to provide employment and payroll information such as pay slips for prior periods.

For employees, this means:

  • STP Phase 2 will make it easier for employees at tax time as they will have better visibility of the types of income they’ve received and where it should be pre-filled in their individual income tax returns.
  • Over time, the new information reported will allow the ATO to tell employees if they’ve provided you with incorrect information that may lead to them getting a tax bill. For example, where an employer wasn’t being notified that their employees have a Study and Training Support Loan.

Do I need to do anything different?

Note that the rollout of the STP Phase 2 does not affect the way you lodge your STP report, it will also not affect the following:

  • the due date
  • the types of payments that are needed
  • tax and super obligations
  • end of year finalisation requirements.

If you are using an STP enabled software, your software provider should have implemented (or working towards implementing) Phase 2 in place ready for you to use.

Employers who use Xero to process their payrun and lodge STP: Xero has applied for an extension and received a deferral for all customers until 31 December 2022 on the rollout of STP Phase 2. Again, Xero users will not need to do anything different – Xero will let us know when it is ready for Phase 2.