STP Phase 2 Frequently Asked Questions

For employers some the main benefits are:

• more granular reporting of payments and greater validation of tax treatments and income types will give employers more certainty that they are paying individuals correctly and therefore meeting their statutory obligations

• sharing of STP data with Services Australia means less imposition on employers to provide information directly to Services Australia

• automatic updating of Tax File Number (TFN) declaration information via STP means less reporting overhead for employers in the event that payees' circumstances change

• automatic reporting of the prior financial year to which Lump Sum E payments correspond means employers will no longer be obligated to issue Lump Sum E letters to payees to identify such payments.

For payees some of the main benefits are:

• more granular reporting of payments will give payees greater confidence that they being paid correctly

• sharing of STP data with Services Australia means that there will be less onus on payees to accurately estimate their income in the event that they are receiving support payments and this will ensure that payees can legitimately claim benefits to which they are entitled without incurring a social security debt due to underestimating their income.

For information about the key things you should consider before commencing STP Phase 2 reporting, please refer to the following topics in the FastTrack360 online help:

• Reporting of paid leave under STP Phase 2

• PAYG withholding variations

• Working Holiday Maker passport country

• Reporting of employment termination under STP Phase 2

• Reporting of taxable allowances under STP Phase 2

Please also refer to the following topic for more information on how FastTrack360 will report certain types of payments under STP Phase 2: Overview of STP Phase 2 - FastTrack360 Online Help - Confluence (atlassian.net)

Reporting of child support deductions is an optional new feature of STP Phase 2. While the ability to report child support payments, which are deduced from payees’ earnings by payroll, through STP ostensibly reduces the additional burden that employers face of reporting child support deductions separately, the implementation of child support reporting via STP currently has several limitations that arguably offset most of the benefits including the following:

• The rules around reporting corrections and adjustments to child support amounts are different to those for all other amounts reported through STP. For example, a downward adjustment to a previously reported child support deduction amount can only be reported through STP if prior consent is given by the Child Support Registrar. This is not practical in most payroll contexts, particularly in a high-volume labour hire setting. To address this issue, legislation changes would be required but such changes have not been enacted to date.

• Once a child support deduction amount has been reported through STP, that same amount or a higher amount must be reported each pay period for the remainder of the financial year or until the child support obligation ceases. This has practical implications for labour hire and casual employment scenarios, where it is common for payees to work irregular patters and to have gaps between assignments.

• Feedback from other payroll software vendors, who were early adopters of STP Phase 2 and opted to provide the child support reporting functionality in their STP solution, indicates that there have been significant teething problems around this feature, especially regarding how Services Australia (SA) consumes and interprets the child support data that is reported through STP. This has resulted in many erroneous requests to employers on behalf of SA that have caused confusion and significant inconvenience for those employers.

FastTrack will continue to monitor developments around this topic and if some of these limitations are addressed in the future, we will re-evaluate the possibility of providing this functionality FastTrack360.

Leave types that have been configured in FastTrack360 to pay leave must be mapped to a corresponding ATO leave type code that identifies the type of leave that is paid (for more information, see Reporting of paid leave under STP Phase 2).

In most cases, no further configuration will be required. When leave is paid, FastTrack360 will refer to the ATO leave type code to which the leave type has been mapped and will automatically report the leave payment accordingly in STP, depending on how the leave is being paid.

However:

• If you pay annual leave loading, check the configuration of the leave type to ensure that the leave loading pay code for Payout deduction rules, which are used when cashing out leave during service, has a pay code type of Overtime, if the leave loading compensates for the opportunity to work overtime. Otherwise, if the leave loading does not compensate for the loss of opportunity to work overtime, ensure the leave loading pay code type is Leave.

• If you pay TOIL leave, check that the configuration of the leave type to ensure that the leave loading pay code for Payout deduction rules, which are used when cashing out leave during service, has a pay code type of Overtime.

No, disaggregation of gross only applies to Individual Non Business payees. For LAB payees, all payments subject to withholding are reported as part of the payee year-to-date gross amount as was the case prior to STP Phase 2.