Single touch payroll (STP) Phase 2

27 March 2023

The Master Builders team has noted an uptick of calls from members regarding changes to single touch payroll (STP) reporting. One issue we have been asked about several times is changes to remuneration reporting. Specifically, the new requirement that in some instances allowances and overtime are not included in gross reporting, and reportable separately.

What is STP?

STP is an Australian Government initiative to reduce employers' reporting burdens to government agencies.

With STP, you report employees' payroll information to the Australian Taxation Office (ATO) each time you pay them through STP-enabled software. Payroll information includes:

  • salaries and wages
  • pay as you go (PAYG) withholding
  • superannuation.

Differences in STP Phase 2 reporting

In Phase 1 reporting, some allowances are reported separately, and some are reported as part of Gross. This has changed for STP Phase 2, which came into place from 1 January 2022 as announced in the 2019-20 Budget.

There are three steps you should follow to work out how to report allowances in STP Phase 2:

  1. Identify whether the amount is a reportable allowance;
  2. Identify whether the allowance needs to be disaggregated;
  3. Identify the purpose of the allowance.

In STP Phase 2, you must separately report all-purpose allowances against the relevant allowance type unless an exception applies. Similarly, you must report the identifiable overtime component of an employee’s remuneration.

All remuneration you pay to employees that is reportable through STP, and is not separately itemised, should be reported as gross.

However, where employees are remunerated by a salary or payments above award where overtime and allowances are not distinctly identifiable components of the remuneration, this is typically not reportable separately.

You can read more about this on the ATO website.

Need more information?

For further information about STP Phase 2, visit the ATO’s website.

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