STP Phase 2 is an updated version of Single Touch Payroll, a reporting measure that was introduced back in 2018/2019. STP-2 is an expansion on these payroll reporting features making it easier to provide specific employee information to the ATO and other Government Agencies. Benefits of STP-2 include:

• Automating the Tax File Number declarations
• No need for employers to provide Lump Sum E letters or Separation Certificates to employees
• Assists employees using Service’s Australia in accessing the right payments

The mandatory reporting start date was 01/01/2022, but all Xero users are covered by the platform’s deferral issued by the ATO. This means that all Xero partners and customers are covered by the deferral until 31/12/22, allowing the platform to bring the software in line with the new reporting requirements.

Although there are changes in the information that is being reported, the following things will remain the same:

• The way you lodge this information
• Reporting due dates
• The types of payments
• Tax and Super obligations
• End of year finalisation requirements

Xero has already implemented some of these reporting features. These features include the ability to select a termination reason when processing and employee’s final pay, Lump sum E and W categories, new pay items for Bonuses and Commissions and separate reporting of allowance types.

As Xero continues to update the platform, we can expect features such as removing manual Tax File Number Filing, new workflows for paying cashed out leave, separately reporting paid leave and changed reporting for Salary Sacrifice to be come available. It is important to keep up to date with the Xero releases in order to stay on top of the new features made available by Xero.

Your advisor at Qubed Advisory will be able to help if you have any questions regarding these changes and the implementation of STP Phase 2.

Carmel Boldrin, Junior Bookkeeper