expanding single touch payroll –phase 2
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Expanding Single Touch Payroll – Phase 2
Background – Intent and original benefits What STP enables
Streamlines processes associated with bringing
on new employees
Assists the ATO to take earlier action to support businesses struggling
with debt
Provides employees real time visibility of PAYGW and Super contributions
Fund
STREAMLINING
PROACTIVE SUPPORT
INCREASED TRANSPARENCY
More data will be available to employees earlier to prefill their tax
returns
Reduces unfair competitive advantage and ensures employers meet their obligations
Provides Opportunities for additional efficiencies across government by
sharing data
PREFILLING
DATA SHARINGLEVELLING THE PLAYING FIELD
Simplifies reporting and voluntary payments
through natural business systems
REAL TIME DATA
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JOBKEEPER ENABLER
Enabled quick implementation of
COVID-19 stimulus response
Ongoing consultation
200kSmall businesses have transitioned to STP payroll software
Over 27.5m STP recordsHave been finalised in the 2019 and 2020 FY
Over 300 STP solutionsAre available on the market
13.7mEmployees are being reported through STP
808KEmployers started STP reporting
Implementation
The journey so far
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Phased approach
Substantial Employers July 2018
(20 or more employees)
Small EmployersJuly 2019
(19 or fewer employees)
Small EmployersJuly 2019
(19 or fewer employees)
Employer
EmployeesProfessional Associations
Special Purpose
Working Groups
DigitalService
ProvidersIndustry
Associations
Payroll Associations
Advisory Groups
Tax and BAS agents
Working with our partners
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Expanding existing STP data set by collecting additional elements and more granular information to make even better use of employment data
Sharing this data across government through updated technology infrastructure
Single Touch Payroll Employment Data
Some changes made to enable easier implementation of any future government policy – future proof
Expanding Single Touch Payroll
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1 January 2022Mandatory start date for Phase 2 reporting
Data only shared for mutual clients
Drivers for Change
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Why
Reducing the burden for employers
reporting to multiple
Government agencies
Improving visibility of
payroll data to support the delivery of
social welfare
Reducing manual
processing and removing
existing irritants for employers
Reducing the need for
employment separation certificates
Reducing the need for
separate Child Support reporting
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Customer research findings on benefits through employer-sourced information
A pilot was conducted with a Nation-wide employer to test the feasibility of using payroll information from an employer to make Government services simpler so people can get on with their lives.
Sourcing payroll information directly from the employer based on what the employer paid was more accurate than customers estimating and reporting their
income
The near real-time exchange of employment information improved
Centrelink payment accuracy from 60% to 100%
Customer confidence in income reporting and payment accuracy increased from 57% to 84% with
employer reporting
Working with Employers
“Great idea for employer to share data with Centrelink, there would be no discrepancies”
“I thought ATO and Centrelink was already joined together?... I thought all the computers talked to each other? That’s what my friends think too”
“People wouldn't want to tell their employer that they are on payment. But if the employer has to send everything to the ATO then it wouldn't be an issue”
“I like the concept of the ATO providing information directly to the department. It reduces chances of accidently getting it wrong or not reporting. You would just have to check it against your pay slip”
“If you are getting a benefit I don't think you should object to the sharing of data. If it stops people being fraudulent”
Customer sentiments support data sharing and confirmed their trust in using STP employment information
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The Simplifying Income Reporting and Other Measures Act 2020
The Bill was enabled on 23 July 2020 by proclamation to commence on 7 December 2020. The Bill changes the way an income recipient will report to Services Australia.
The Treasury Laws Amendment (2020 Measures No.2) Bill 2020
The Bill passed both houses on 25 August 2020 and received Royal Assent.This Bill supports Phase 2 implementation, including:• The collection of the child support garnishee and deduction
amounts by the Commissioner,• The sharing of the child support amounts between the
Commissioner and the Registrar of Child Support on a standing authority,
• Employers being able to voluntarily extinguish their CSA reporting obligations via reporting through STP as opposed to the manual process directly to CSA.
Legislation
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Services Australia will utilise STP data to make it easier for our customers to report employment details.
For example, STP data will be pre-filled and displayed to customers online so they can view and update their income information.
Implementation of STP data is one of the agency’s significant priorities as part of the Social Services Portfolio, allowing employment data to flow from employers through the ATO, and reducing the reporting burden on customers and business.
STP Phase 1 data is now being provided by the majority of employers and there is a strong intersection with Services Australia.
Services Australia population
STP in Services Australia
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1.1M+Child Support
Customers with STP Data
648K+Employers
13.1M+Employers/Employee Relationships
6.5M+Centrelink
Customers with STP Data
7.6M+Customers with STP Data
(Centrelink and Child Support)
397M+Payment events received
As at 21 February 2021
1.1M+Child Support
Customers with STP Data
We tell the customer when STP data is being used
The customer is asked to confirm the
information The display of ABN
supports cross referencing with information on a
customer’s pay slip
Where a customer rejects the employer – we provide a
confirmation that we have not saved them to their employer
list
The customer can match the record if the employer is listed
by a different name
Customers are supported to accurately report their employment income by pre-filling information to confirm, edit or reject
How Services Australia is simplifying reporting of employment income
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We will put people at the centre of
everything we do.
We will protect customer
information.
We will give customers the opportunity to confirm their
employment information.
We will ensure that the use of STP data is legal, in line
with privacy/data protection guidelines and is ethical.
We will ensure that we are supporting
customers with low digital literacy.
We will co-design and collaborate with
businesses, payroll industry, and users.
We will minimise stress for customers by providing the right payment, to the right person, at the right time
Services Australia Key Design Principles
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What isn’t changing
In scope payments
• Mandatory• Voluntary• Cannot be reported
Due date of STP reports
Finalisation requirements
Taxation and Superannuation
rules/law
What isn’t changing
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What is different
Key changes
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Lump Sum E by financial year
Separately reporting Salary Sacrifice
New fields to replace TFND Services
New Child Support Agency deduction and garnisheeDisaggregation of Gross
Adding new Cessation Type reason
Reporting by Income Type/Country Codes
Transferring payee YTD amounts
Commencement Date – the start of the employment or engagement relationship between the employer and the employee.
Offset Amount – the annual tax offset that some employees may have provided their employer to reduce their withholding when specific criteria or concessions apply.
Tax Treatment – helps us identify the factors that influenced PAYGW calculation. For example, where an employee has notified their employer that they have a Study Training Support Loan.
Cessation Type (reason) – the reason the employee has ceased their employment or engagement relationship such as Ill health, redundancy, dismissal.
Employment Basis – the employee’s work pattern basis such as Full time, Part time, Labour hire.
Cessation Date – the end of the employment or engagement relationship between the employer and employee.
Employment conditions
Commencement Date
Cessation Date
Employment Basis
Cessation Type
Tax Treatment
Offset Amount
Providing this extra information will mean you have met your obligation to send TFND details to the ATO.
Employment conditions
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Salary and wages (SAW)
Closely held payees (CHP)
Inbound Assignees toAustralia (IAA)
Working holidaymaker (WHM)
Seasonal worker program (SWP)
Foreign employmentincome (FEI)
Joint Petroleum Development Area (JPDA)
Voluntary Agreement(VOL)
Labour hire(LAB)
Other specified Payments(OSP)
Some multinational employers exchange, or transfer, employees between affiliated entities in different tax jurisdictions. This is done for business and commercial purposes.
A payee who is directly related to the small employer entity from which they receive payments, such as family members of a family business; directors or shareholders of a company; beneficiaries of a trust
Income only for limited visa subclasses – 417 (Working Holiday) and 462 (Work and Holiday)
Regional programmes for government-approved employers:
Seasonal Worker Programme (SWP) – administered by the Department of Employment, Skills, Small and Family Business.
Assessable income paid to employees for work performed in Australia, other than that included as other Income Types.
Assessable income paid to payees, who are Australian tax residents, that is subject to tax in another country, for work performed in that country, if the qualification period is met.
Payments to individuals for work or services performed in the JPDA where the payment is covered by Subdivision 12-B of schedule 1 to the TAA and the employee provided a valid TFN to the payer.
A written agreement between a payer and a contractor payee to bring work payments into the PAYGW system. The payer does not have to withhold amounts for payments they make to contractors.
Payments by a business that arranges for persons to perform work or services, or performances, directly for clients of the entity.
Specified payments by regulation 27 of the Taxation Administration Regulations 2017.
Income types and country codes
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STP Phase 1 - you report an aggregated total of YTD gross income amounts.
STP Phase 2 - moves to a model of reporting disaggregated gross income, aligned to the way the different payment types are categorised.
Disaggregating Gross
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Phase 1 Phase 2
Paid Leave
Allowance Items
Overtime
Bonuses andCommissions
Directors’Fees
SalarySacrifice
Gross(new definition)
GrossPaid Leave Overtime
Bonuses and Commissions
Directors’ Fees
Salary Sacrifice
Allowances
Gross (new definition)
Paid Leave
Allowances
Payment types
Cash out of leave in serviceUnused leave on terminationPaid Parental LeaveWorkers’ CompensationAncillary and Defence LeaveOther Paid Leave
Overtime
The total of reportable income: • Less the separately itemised
components that are now discretely reported.
• Gross is the residual amount that remains.
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Salary Sacrifice
Directors’ Fees
Bonuses andcommissions
Superannuation
Other Employee Benefits
Cents per Kilometre
Award Transport Payments
Laundry
Overtime Meal AllowancesDomestic or Overseas Travel Allowances and Overseas Accommodation AllowancesTool Allowances
Task Allowances
Qualification Allowances
Other Allowances:• Uniform• Private Vehicle• Home Office
• Transport/Fares• General • JobKeeper
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Support and next steps
Fact/tip sheets
Livestream
Factsheet
High level web content
Guidance and support
Correspondence from the ATO
Videos
Readiness checklists
More detailed web content
Employer Guide
Now April – June
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You don’t need to do anything right now• We are currently working with Digital Service Providers on the changes and they will
begin communicating with you once they are ready – you don’t need to contact them about Phase 2 yet
Keep up to date • Make sure you are up to date with your software providers regular communication channels
(newsletters, forums etc.)• Subscribe to ATO newsletters such as the Small Business and Tax Professional Newsrooms
Next steps
Further information will be available• Check ato.gov.au/STP regularly
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