After the roll out of Single Touch Payroll (STP) Phase 1, the Australian Tax Office (ATO) is moving on to phase 2 with new reporting requirements. Learn more about the MYOB Advanced STP Phase 2 updates in this article.
STP Phase 2 has been deferred until August 2022 for for mid-market MYOB Advanced users (business with 20-500 people). On the other hand, small businesses using MYOB will have until January 2023.
What are the main changes in STP Phase 2?
- STP reports will now include Tax File Number (TFN) Declarations.
- No more Employee Separation Certificates
- STP Reports will now include Lump Sum E payments
- No need to submit advice to Child Support Registrar
What are the benefits of STP Phase 2?
- Employers no longer need to send TFN Declarations to the ATO
- Closely held payees and inbound signees
- Employers no longer need to send Lump Sum E letters to employees
- Payroll data integrates with Services Australia
What can you do to prepare for STP Phase 2?
The first step is to familiarize yourself with all the requirements and how it affects reporting. Discuss these changes with your decision-makers, advisors, and workforce and implement a plan for smoother compliance.
Key MYOB Advanced STP Phase 2 Updates
To ensure that your payroll software is STP 2 compliant, MYOB Advanced has updated its payroll software with the following features:
Employee Reporting Changes
Reporting by Income Type
The ATO has now categorized Income Types into:
- Salary & Waged employees (SAW)
- Inbound Assignees to Australia (IAA)
- Closely Held Payees (CHP)
- Seasonal Workers Programme (SWP)
In MYOB Advanced, employees are provided a default Income Type on the Taxation tab of the Employee’s Pay Detail’s record. Once the default type is applied, you can review and update if needed.
There’s also an action that applies the reviewed changes to an employee’s current configuration and historical records.
Reporting by Country Code
To meet Australia’s international tax treaties, income types must report the YTD income by Country Code. However, this only affect employees categorised as “IAA” or “WHM”:
- IAA employees must report the country they were a tax resident of before coming to Australia
- WHM employees must report their “home” country
Also on the Taxation tab of the Employee’s Pay Detail’s record, there’s an added field called “Country” where you can input the country code.
Removal of the Onboarding Section or (TFN Declaration)
Instead of submitting TFN Declarations, businesses must set “Employee Conditions” within their payroll.
There are new fields under this section to capture more employee information and provide context to the data that businesses provide for each pay run to government agencies. The new fields include:
- Employment Basis Codes
- Tax Treatment Codes
- Tax Offset Amount
Payment Reporting Changes
To keep up with the payment reporting changes, there is a new screen to help with reviewing all Pay Item’s ATP categories and bulk updating pay items within MYOB Advanced. A couple of other features include:
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- An action that defaults the likely Pay item ATO category
- Ability to review and update remaining pay item categories where the default update action was unable to determine a pay items category
- An action to apply the reviewed changes to the current configuration and historical records
You can also update pay item liabilities and pay item types according to ATO category’s list values. Also, new MYOB Advanced users will automatically have updated pay items.
Division of Gross
The ATO requires STP reports to include a gross amount – a total of different components and payment types. For STP 2, businesses will need to report in further detail because some of the payments are handled differently for security purposes.
The excluded payments are classified as follows:
- Paid leave
- Allowances (extension and rule changes to what was already reported)
- Overtime
- Bonuses and commissions
- Directors’ fees
- Lump-sum W (Return to work payments)
- Salary sacrifice
Child Support garnishees and child support deductions
MYOB Advanced has added “Child support deductions” and “Child support garnishee” options to its pay item ATO categories.
When a deduction falls under the category of “Child Support”, its default setting will be a part of the bulk update pay items. After this has been set, you will need to manually review and set any items that need to be “Child support garnishee”.
Read up on MYOB Advanced STP Phase 2 Resources
We’ve barely scratched the surface on all the technicalities of the new STP 2 requirements. Luckily, there are plenty of instructional materials from the MYOB Advanced Help Centre to explain these updates.
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