On 1 January 2022, the ATO expanded the Single Touch Payroll (STP) reporting to have additional information to be reported to the ATO each time the payroll is run. This is known as STP Phase 2.

Depending on your digital service provider, some may need more time to update their systems and may have applied for deferrals. As such your STP Phase 2 reporting will depend on when your payroll solution is ready for Phase 2. If you haven't already started Phase 2 reporting, make sure you ask your payroll provider when their solution will be ready if you don't already know.

If you have employees, you may need to ensure that you're aware of these changes, and that you can start:

• reviewing any payroll pay codes/categories that need changes so that they align with Phase 2 requirements;
• reviewing allowances paid to employees and whether they need to be reported in Phase 2;
• understanding any impact to salary sacrifice reporting; and
• understanding how an income type should be assigned to each payment.

If you have payments made to 'closely held' payees, they should now be reported through STP. The concessional reporting options for 'closely held' payees reporting include:

• reporting actual payments on or before the date of payment (along with your arm's length employees);
• reporting actual payments on quarterly basis; and
• reporting a reasonable estimate on quarterly basis.

Contact us if you need any help to understand the changes.