The expansion of Single Touch Payroll also known as STP Phase 2 aims to reduce reporting burdens for employers who report employee information to multiple government agencies.

STP Phase 2 doesn’t change the payments you need to report through STP, but it does change how those amounts are to be reported.

Although these changes commenced on 1 January 2022, the new financial year is always a timely reminder to check your compliance with the changes.

Changes Introduced With Phase 2 Reporting

During Phase 1, some allowances were reported separately and some were reported as a part of the gross or an “all-inclusive hourly rate”. This has changed for STP Phase 2.

Employers may have historically set up their payroll using a single rate that includes the employees’ hourly rate and all-purpose allowances. Moving forward, employers will now need to list hourly rates of pay separately from all allowances.

Important Note: all-purpose allowances including Tool Allowance, Electricians License Allowance and Industry Allowance must be itemized. Some allowances are treated differently in various situations, and not being able to identify them may disadvantage your employee. For example, the ATO treats allowances in a tax return differently to that of Services Australia when assessing a benefit claim.

Using the Award Minimum rate as an Example

Fred employs James and he is employed under the Electrical, Electronic and Communications Contracting Award 2020. When Fred reports the wages he paid James for his week of work through STP, he includes:

* Fred doesn’t need to separate the allowances which are part of the calculated overtime payment.

The allowance types that will be commonly reported from within the Electrical, Electronic and Communications Contracting award include:

Other Significant Changes to STP Phase 2 Reporting Include

Tax File Number Declarations

Information collected from TFN declarations including the TFN itself, employment type and whether the employee has a HECS-HELP debt are to be included in STP reports. The declaration itself will no longer need to be supplied to the ATO.

Employee Separation Certificates

These certificates are no longer required. The reason why an employee has left the business will now be provided via STP reports.

Child Support

Businesses will have the option to include child support garnishees and deductions in their STP report, reducing the need to provide separate advice to the Child Support Registrar.

 For further information please contact the Employer Advice Line on 1300 889 198.

Access the ATO’s reference guide for assistance to identify if allowance amounts are reportable and if they need to be disaggregated.

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