Get ready for Single Touch Payroll Phase 2

Single Touch Payroll (STP) Phase 2 describes the expansion of the original STP reporting, designed to reduce the reporting burden of employers and share more information with the ATO and other government agencies.

STP Phase 2 is underway, with both Stage 1 and Stage 2 changes available on select digital service providers. Today we breakdown how to implement the Stage 1 and Stage 2 changes in your payroll software.

You will need to transition to STP Phase 2 before 1 January 2023. However, Xero customers have been granted an extension until 31 March 2023 to implement Phase 2 reporting.

Xero:

If you operate your payroll through Xero, follow these steps to complete stage 1 and update existing employee details:

1. Navigate to Payroll, Single Touch Payroll, STP Phase 2, Step 1. Update employee profiles and select Update employee profiles.
2. Select Update next to an employee’s record and add the required details for active payees in your employee list. You will navigate through three sections: select employment type, select income type and select tax scale type.
3. Select Save and continue to confirm the updates to the employee’s profile and if you haven’t done so already, invite the employee to Xero Me by entering the employee’s email in the Email field and click Invite.
4. Once you have updated all existing employee’s profiles navigate to Payroll, Single Touch Payroll, STP Phase 2, Step 1. Update employee profiles and select Mark as done.

You can also access Xero’s employee transition fact sheet here, or view the employee transition video here.

To continue to stage 2, follow these steps to update pay items:

1. Navigate to Payroll à Single Touch Payroll à STP Phase 2 à Step 2. Replace pay items and select Replace pay items.
2. In the Pay items tab, review the Earnings Name column to check each pay item. To replace a pay item, click the three dots, select Replace and select the appropriate earnings category from the drop-down menu, then select Next. Update pay templates that use the replaced. pay item by selecting the tick boxes next to the employees that use these pay templates and select Next. Click Confirm to update the pay item and relevant pay templates.
3. Click Pay item settings and follow these steps until all pay items have been updated
4. Once you have updated all existing pay items, navigate to Payroll à Single Touch Payroll à STP phase 2 à Step 2 Replace pay items and select Mark as done.

You can also access Xero’s pay item transition fact sheet here, or view the pay item transition video here.

Myob:

If you operate your payroll through Myob, follow these steps to complete stage 1 and update existing employee details:

1. Navigate to Payroll à Single Touch Payroll reporting and click Get started.
2. Click Check my payroll information to fix any listed issues and update your business details under Edit business details if necessary, and save your changes.
3. Click the employee’s name, make the required changes, click Save and click the link at the top of the screen to continue preparing for STP Phase 2.
4. For each employee, select the applicable Income type, and click Save and check details to see if anything else needs fixing.

To continue to stage 2, follow these steps to update pay items:

1. For each listed pay item, choose the applicable Phase 2 ATO category and click Save and check details.

• If you paid a lump sum E payment that related to one financial year, specify which year the payment related to and remove all employees from the lump sum E payroll category.

2. When no more issues are found, click Transfer business to STP Phase 2.
3. Click Send update event to make sure the ATO has the current year-to-date payroll totals and check the STP totals you’ve reported to the ATO.

You can also access Myob’s STP Phase 2 guide here.

 

If you use another digital service provider to manage your payroll data, talk to your provider, check their website, and read their newsletters to learn how to transition to the new reporting requirements.

Please call or click to discuss with a Macro Group Team Member if you would like further information.

The Macro Group Team

Published on 4 October 2022