Single Touch Payroll (STP) was implemented to enable employers to transmit superannuation and taxation data directly to the Australian Taxation Office (ATO) using STP-enabled software. The implementation of STP Phase 2 commenced on 1 January 2022. There are additional requirements for reporting detailed information through STP. For instance, amounts sacrificed from an employee’s salary must be reported separately.

The ATO also directly receives information from superannuation funds under STP Phase 2. When employers make superannuation payments to their employees’ superannuation funds, these funds transmit the relevant data to the ATO. This enables the ATO to match the information received from employers through STP with the data from superannuation funds. The purpose of this matching process is to ensure that the correct entitlements are being paid to employees.

Common STP Phase 2 mistakes below, made by employers, have been identified by the ATO.

Pay codes

Pay codes need to be set up correctly, including allowances, paid leave and over time – as they should be itemised separately.

Do no report/not reportable

All amounts should generally be reported, the not reportable options should only be used for travel allowances below the ATO’s reasonable amount thresholds, overtime meal allowances below the ATO’s reasonable amount reimbursements, and post-tax deductions (except for those separately identified).

Employee cessation

Cessation date and reason for an employee leaving should be reported, especially when there are also payments that are connected to termination, such as:

• employment termination payments
• unused leave termination payments
• lump sum payments.

This information will flow through to Services Australia and help streamline interactions with the employee.

Data accuracy

Before tax time, we suggest ensuring the accuracy of your basic data, including:

• employee names
• tax file numbers
• dates of birth
• employment type (full-time, part-time or casual)
• country codes (when payments are made to employees who derive foreign employment income, are inbound assignees to Australia or are working holiday makers).

TIP: Do not enter “na” in the country code field to represent “not applicable”, “na” represents the country code of Namibia.

If you have any questions about your transition to STP Phase 2, please contact your accountant or call us on 03 5443 0344.