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Important payroll update: simplified reporting and STP Phase 2 transition
12 October 2023 | Minutes to read: 2

Important payroll update: simplified reporting and STP Phase 2 transition

By Michele Nevill

STP Phase 2 changes that need your input with two key actions. Firstly, carefully review your payroll reporting codes to ensure accurate data submission to the ATO through STP. Secondly, you will start to see BAS data pre-filling by the ATO, it’s important to cross-check this information with your payroll records. This verification process is essential to identify and rectify payroll setup errors.

There are significant changes afoot in payroll reporting. Here are the essential details you need:

1. Payroll setup – review reporting codes for precise STP reporting

Ensure your payroll setup is accurate, specifically the reporting codes. This will improve the accuracy of data submitted to the Australian Taxation Office (ATO) via the Single Touch Payroll (STP) system, upholding the highest standards of precision and compliance.

2. BAS pre-fill data cross-check

The ATO will begin automated pre-filling of Business Activity Statements (BAS) data, ensuring you cross-check the pre-fills against your payroll records will prove the correct data has been submitted to the ATO and ensure correct withholdings are remitted to the ATO. Any anomalies you identify may highlight errors in your system configuration.

3. Understanding salary sacrifice reporting in STP Phase 2

STP Phase 2 requirements of reporting employee year-to-date (YTD) amounts has evolved:

  • STP Phase 1, only post-sacrificed amounts were reported.
  • STP Phase 2 mandates the separate reporting of pre-sacrificed amounts:
    • Type S: Denotes amounts sacrificed to superannuation.
    • Type O: Indicates amounts sacrificed towards other benefits.

Different payroll solutions have different ways of setting up and displaying salary sacrifice amounts, so employers should refer to their product’s guidance.

4. Unchanged activity statement requirements

While STP reporting has changed, activity statement requirements remain unchanged. Report only post- tax sacrificed amounts under label W1 and avoid including pre-tax sacrificed amounts at this label.

5. ATO’s pre-fill assistance

The ATO aims to simplify reporting by pre-filling labels W1 and W2 on your activity statements. This data comes from employer-level totals reported through STP, streamlining the process and enhancing precision.

Maintaining compliance and precision in your payroll reporting is paramount. For more information STP Phase 2 changes, please contact your local William Buck Business Advisor.

Important payroll update: simplified reporting and STP Phase 2 transition

Michele Nevill

Michele is a Director in both our Business Advisory and Audit team with over 30 years' experience assisting clients in their day-to-day operations. Michele's in depth knowledge and experience in the Western Sydney region allows her to understand the unique challenges and opportunities facing SMEs in the area. Michele's extensive knowledge of both business advisory and audit allows her to work with a variety of clients including unlisted public companies, Australian subsidiaries of overseas global corporations and local family businesses.

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