Australian Employers: Plan for Single Touch Payroll Phase Two
According to the Australian Taxation Office (ATO), Single Touch Payroll Phase 2 (STP2) begins 1 January 2022 for Australian employers. STP2 brings offers more granular data and extended reporting capabilities to payroll submissions. Rizing will help SAP® Payroll customers test and implement the changes in time for the expected rollover date.
Single Touch Payroll (STP)
Beginning in mid-July 2018, the Australian Taxation Office (ATO) began implementation of an initiative known as Single Touch Payroll (STP). The main goal of the project was to reduce employers’ reporting burdens to government agencies.
“In the old days, your company would deduct tax from you based on your earnings,” says Deon van Onselen, Practice Director for Payroll and Time APAC at Rizing HCMP. “Then at the end of the financial year, your employer would submit your financials to the Australian Taxation Office for one big reconciliation. After that, you could go into a tax office and submit your tax return. STP means payroll information is submitted with every single payroll instead of it all being submitted at the end of the year. Employees now can go into the ATO website and view their tax results for the year to date.”
Although various deferments and COVID-19 delayed the STP implementation schedule, as of 1 July 2021 the ATO considered the program fully in place.
The first phase, anyway.
Now it’s time for businesses to plan for STP Phase Two.
Single Touch Payroll Phase Two (STP2)
Mainly, STP2 allows employers to submit more granular and accurate payroll data.
STP2 replaces fields that held aggregated values (like gross pay) with separate fields for all types of pay (bonuses, commissions, director fees, etc).
“STP1 had allowances grouped into one category and then deductions and tax,” says van Onselen. “Now there are multiple categories for allowances. There will also be additional categories for leave types and superannuation (which is our pension fund).”
Implementing Single Touch Payroll Phase 2
van Onselen outlined the STP2 update process for Rizing customers:
- SAP releases support packs with updated payroll code
- Rizing installs the updated code in an internal development environment
- Rizing performs unit testing with internal data
- Once happy with the results, Rizing installs the updates in a customer-specific test environment
- Rizing configures the updates to conform to specific customer requirements
- End customer tests the updated code
“We can’t actually submit test payroll information to the ATO,” says van Onselen. “But we can look at the payroll file that the test system generates and validate it against the ATO STP2 specifications.”
STP2 implementation timeline
According to the ATO, the mandatory start date for STP Phase 2 reporting will be 1 January 2022.
However, van Onselen expects there will be a deadline deferral with Single Touch Payroll Phase 2 just like there was with Phase 1.
“I believe the ATO deferral will run until the 1st of July 2022,” he says. “We should see the solution implemented in the first SAP support pack release next year, so we can test it from April or March until the end of June,” he says. “By the 31st of June we’d like to have the changes implemented for all of our customers so they can submit the updated file on the 1st of July.”
Mainly, van Onselen wants to make sure customers know the changes are coming and the expected schedule for them.
“With proper planning the changeover should be painless,” he says. “It will just roll over once we hit the correct date.”
Learn more about STP2 and other payroll compliance issues at our upcoming webinar:
Webinar: Ensure Compliance and Empower Your People to Work On Your Business, Not In It
September 21, 2021 – 11:00 am SGT / 1:00 pm AEST
Are you confident your organization’s payroll and wage compliance is accurate?
Rizing’s packaged cloud payroll solution, based on SAP SuccessFactors Employee Central Payroll, allows you to reduce time to go live, ensure compliance and minimize your HR and payroll departments focus on transactional “back office” tasks, while providing them the ability to focus on truly strategic initiatives such as attracting, hiring, developing, and retaining your most important asset, your people.
Join this session to discover the benefits of Synchrony Payroll for your business:
- Get the big picture payroll and time tracking requirements and trends
- Learn how SAP SuccessFactors Employee Central Payroll helps you automate and accelerate processing, reduce risk, and simplify payroll management
- See how Rizing’s packaged cloud payroll solution’s pre-built accelerators, processes, and localization is helping organizations of all sizes achieve their goals