What is STP Phase 2?

Single Touch Payroll (STP) is an Australian Federal Government initiative aimed at reducing employers’ reporting burdens to multiple government agencies and provide real-time information to employees. It became a mandatory obligation for all businesses with employees on 1 July 2019, with a transition phase for special circumstances like closely-held employees.

The change to STP was split into two phases, STP Phase 1 and STP Phase 2. Phase 1 focused on transitioning payroll away from manual or paper based to be electronic based and reported online to the ATO each payday. Phase 2 focused on the quality of information that was reported to allow multiple government agencies to share the same pool of payroll information in a more accurate manner.

What is the deadline?

The mandatory start date for STP Phase 2 reporting was 1 January 2022 for all employers unless you or your payroll software provider was granted an extension by the ATO.

At the handing down of the Federal Budget 2023-24 on 9 May 2023, all the major payroll software providers in Australia have completed upgrades to their software to be STP Phase 2 compliant.

Who do you use to process your payroll? See the list below for the expiry date of any deferrals they had in place with the ATO.  

The ball now rests with the business owner and payroll officers to make sure that they are reporting on time and correctly using STP and STP-enabled payroll software.

Penalties for missed STP reporting. 

The ATO previously announced that business owners must comply with STP Phase 2 or potentially face penalties.

The penalties for late or missed STP reporting start from $210 per day for every 28 days your report is overdue, to a maximum of:

• $1,050 for small businesses
• $2,100 for medium entities
• $5,250 for large entities and
• $525,000 for global entities

Don’t forget these penalties are not tax deductible.

STP Phase 2 and the Federal Budget 2023-24

The Federal Government will push forward with introducing legislation that will require all employers from 1 July 2026 to pay compulsory super guarantee contributions on payday rather than quarterly.

This is a seismic shift in the timing that employers pay superannuation, and the proposed start date is a heads up for many business owners to get ready early.

The ATO is set to receive additional funding under the Federal Budget that can be used in its compliance crackdown to ensure employers comply with areas such as STP reporting, where superannuation information is reported each payday to the ATO.

Need help to meet your STP Phase 2 requirements?

Our team of software accredited accountants and bookkeepers are ready to assist you with making sure you are STP Phase 2 compliant.

If you are looking for a hands-free approach to meeting your requirements or to check that you are compliant, contact our office on 02 6260 4994 or email reception@gillespieadvisory.com.au