Single-touch-payroll or STP is monthly online payroll submission directly from payroll software to replace annual manual payroll reporting. Phase 2 requires all businesses to start submitting payroll data by the 31st of March 2023.
How to start.
Xero is rolling out 3 stages to help with the transition for the new Single Touch Payroll requirements.
Stage 1 – Employee records.
This stage requires you to check and update all employee profiles and determine the following.
- Employee type – if they are an employee or contactor. To help you determine the difference between the two types you can refer to the following article here.
- Income type – salary/wages, closely held payee, working holiday maker, non-employee, labour hire etc.
- Employment basis – whether they work full-time, part-time, or casual.
- Tax scale – whether they are regular, actors/artists/entertainers, horticulturalists/shearers, senior/pensioners.
Stage 2 – Earnings pay items.
In this stage the change now requires you to report the individual components of an employee’s pay rather than a single gross amount. You will need to assign ATO reporting categories to your existing earnings pay items. These categories include:
- – Ordinary time earnings
- – Allowances
- – Bonuses and commissions
- – Director’s fees
- – Paid parental leave
- – Overtime
- – Lump sum W and E payments
- – Worker’s compensation.
– Stage 3 – Leave pay items
This final stage requires you to assign leave categories to each leave pay item by breaking them down to sub-categories for which different tax treatments apply. Some leave categories include:
- – Annual leave
- – Compassionate and bereavement leave
- – Long Service leave
- – Personal leave
- – Study leave
- – Community service leave
- – Jury Duty leave
- – And many more
- If you own a xero organisation they have created an information pack that provides a breakdown on how to make these changes. You can access this by selecting Payroll > Single Touch Payroll > Go to STP2 Portal > Click on “Download STP2 Information Pack.
For more information you can also contact our friendly team and we’ll be happy to help.
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Disclcaimer: The information provided within this article is general information only. None of the comments in these notes are intended to be advice, whether legal, financial product or professional. You should obtain specific advice regarding your particular circumstances from a tax or legal professional.