Effectively Preparing Your Business for STP Phase 2

Posted 17 Mar '22

It’s time! Starting in mid-April, Single Touch Payroll (STP) Phase 2 will be rolling out to make it easier for Australian businesses to ensure they are reporting accurate information to the Australia Tax Office (ATO).

Businesses have already been using STP Phase 1 to help employees report their taxes and superannuation to the ATO. Now, STP Phase 2 will require businesses to report more detailed information and data to the ATO (See the updated info required here). Luckily, the way businesses report this information through Xero will not change much.

While each business will have to make some type of adjustment to account for their special setup, it is theorised that the transition won’t be much of an imposition. Check out our report for the latest information you need to know about preparing your business for STP Phase 2!

What is STP Phase 2?

Simply put, STP Phase 2 is a continuation of STP Phase 1 that businesses have already been utilising. While STP Phase 1 focused on the reporting of employee taxes and super, Phase 2 will include updates regarding how businesses set up new employees through the Xero system.

While Phase 2 technically began at the first of the year, in January of 2022, the first phase of STP Phase 2 will roll out in the middle of April of 2022. From there, different phases of STP Phase 2 will be established throughout the rest of 2022.

What Does STP Phase 2 Entail?

This is the top question on every business’ mind, and understandably so! What can we all expect from STP Phase 2? This phase of Single Touch Payroll will roll out in three different stages to ensure each business has a chance to fully comprehend and begin implementing the necessary changes.

STP Phase 2 Stages using Xero Payroll:

• Stage 1: During this stage that will be rolled out mid April, you can expect updates surrounding how new employees are reported in the Xero Payroll system.
• Stage 2: Around the middle of the year, Xero will implement the new updates to existing employee records in Xero payroll, to ensure adequate compliance. This will allow enough time to ensure your business has all the necessary information recorded for each employee.
• Stage 3: This stage will strategically roll out sometime in the second part of the year, and will see the new pay items required for STP2 in Xero. By this time, you will receive product support to make sure your business is on the right track.

From declaring the reason for termination to child support garnishment, there is simply more information now required surrounding the employment of an individual. For more detailed notes on what you can expect to change, visit the ATO’s Key Changes explanation.

What Will Remain the Same With STP Phase 2?

There’s no doubt that change is sometimes difficult, but rest assured that not everything is changing through STP Phase 2. For example, how much is paid for tax and superannuation will not change. In addition, the way businesses log their data and the dates on which that information is due will not be altered.

How Can Businesses Prepare for STP Phase 2?

You can begin preparing now for STP Phase 2 by becoming well-versed with the changes and options that have been available in Xero. If you aren’t using Xero, check your payroll software website for accurate rollout information. Take note of what will now be required, and begin to implement in-house changes to accommodate for the data that will now be required. For further assistance, reach out to our professionals at Empire Accountants based in Brisbane and Gold Coast!

Where Can Businesses Get Assistance with STP PHase 2?

The Australian Tax Office is always a reliable source for updated information regarding your tax and reporting obligations as a business. In addition, it is advised that you reach out to a trusted accountant to ensure you are following all compliance requirements.

Here at Empire Accountants, we are dedicated to giving our business clients the full perspective of what they must do to remain compliant. In addition, we ensure our solutions are easy to understand and broken down into applicable steps. Contact Us today to get started!