STP Phase 2 - Rollout Begins
The ATO are introducing Single Touch Payroll Phase 2 (STP2) which requires employers to report even more detailed payroll information. Xero users have been granted a deferral until the 31st of March 2023 and MYOB users have until the 1st of January 2023 to make the move.
Xero are gradually rolling out the setup of STP2 in three parts, with Step 1 available now. Whilst you have plenty of time to complete these steps, we recommend completing them as they come available to save needing to rush at last minute.
The setup of STP2 is broken down into the following steps:
Update Employee Profiles
Replace pay items
Assign leave categories
Stage One: Employee Profiles (Now Available)
The Employment and Taxes tab in Xero's payroll employee setup has been overhauled with some new fields added as required for STP Phase 2.
Employers are now required to select whether a team member is an employee or contractor.
For employees, you will then need to declare their:
- Income Type
- Tax Scale
See our guide below:
Income Type
The options for Income Type are Salary and Wages, Closely Held Payee or Working Holiday Marker.
Working Holiday Marker is for these foreign residents that are currently working in Australia on an applicable Visa.
Closely held payees are individuals that is directly related to the business. This includes shareholders, directors and family members of these individuals.
All other employees fall under Salary and Wages.
Tax Scale
The options for Income Type are Regular; Actors, variety artists and other entertainers; Horticulturists and shearers; or Seniors and pensioners.
Xero payroll only supports calculation of PAYG Withholding for the regular tax scale. You will need to manually calculate the tax withheld otherwise.
Watch our video above for a walkthrough on these steps.
You can read more on the Stage One of Xero’s STP2 rollout in their guide: https://www.xero.com/au/programme/single-touch-payroll/stp-2/s1-existing-payroll/