The ATO is expanding the payroll information it collects through Single Touch Payroll from the 1st of January 2022. Some employers will need to be compliant by that date while others such as Xero customers have a deferred date to comply of 31 December 2022. This will mean employers will need to review their pay systems to ensure they are compliant.
What is changing?
More data is going to be collected as part of Single Touch Payroll lodgements to better enable government agencies to data match and meet reporting requirements.
The extra data collected will include employment basis (eg Full time, part time, casual), income type (eg Salary and wages, closely held payee) and a more detailed breakdown of gross payments.
Another change will be that TFN Declarations will be incorporated into STP reporting meaning a seperate lodgement of a TFN Declaration would not be necessary. However it should be noted that under new super rules, an employer can't request an employees default fund until a TFN Declaration or an STP event has been lodged. For more, see our article on super changes here.
What do I need to do to get ready?
To get ready, employers should review their payroll software to ensure the right data can be reported. The following areas need to be reviewed:
1. Employment basis
Review the employment basis entered in payroll. In Xero this can be found under Payroll>Employees>Taxes.
In MYOB employment basis can be found via Payroll>Employees>Payroll Details>Employment Details
2. Income Type
The income type option is not currently available in Xero but Xero do have a deferral until 31 December 2022 to be ready. In MYOB you can go to Payroll>Employees>select an employee>Payroll details tax>Taxes tab to select an income type
3. ATO Reporting Categories
Several new payment categories will be added to breakdown gross payments to provide more accurate data to the ATO. Some of the new categories are:
- Directors Fees
- Allowances - tools
- Cash out of leave in service
- Unused leave on termination
- Other Paid Leave
- Salary Sacrifice
Xero have not yet added these categories but we would expect them to be available in Payroll Settings>Pay items well before 31 December 2022. For MYOB you can go to Payroll>Pay items to assign reporting categories to pay types.