Get your STP Phase 2 reporting right

STP Phase 2 Reporting

As more employers transition to Single Touch Payroll (STP) Phase 2 reporting, the ATO has identified some common mistakes to be aware of.

1. Pay Codes

Make sure that pay codes are set up correctly. Payments such as allowances, paid leave, and overtime should be listed separately.

2. Continuity of year-to-date (YTD) reporting

If you moved to STP Phase 2 reporting midway through the financial year, you should maintain the YTD amounts you already reported in Phase 1 unless you used an alternative method to transition to STP Phase 2. 

3. Employee Details

Employee name, tax file number, and date of birth are all used to match STP records. As tax time approaches, ensure that these details are accurate and complete. 

4. Employment basis

Your employee’s employment basis (i.e. full-time, part-time, or casual) should be accurately reported each time you run payroll

5. Incorrectly selecting ‘not reportable’ or ‘do not report to the ATO’ 

Generally, all amounts paid to employees should be reported unless specifically exempted ( allowance below the threshold, overtime meal allowance below the threshold, reimbursement etc.).

6. Omitting cessation date and reason

When an employee leaves, you must include their cessation date and reason in your STP Phase 2 reporting. 

Include the cessation date and reason even if you may rehire the employee in the future. If you do rehire the employee, you can remove the cessation date and reason from your STP report the next time you pay them.

7. Incorrectly reporting the ‘na’ country code

The code ‘na’, does not mean ‘not applicable’. ‘na’ is the country code for Namibia. Where you are required to report a country code, you cannot report ‘not applicable’

8. Incorrectly reporting amounts using the ‘Other allowances’ category

Only report an amount as Other allowances (allowance type OD) if it’s an allowance that does not belong in one of the 8 specific allowance categories. You must report allowances in their appropriate category because each category is treated differently for tax, super and social security purposes.

9. Not separately reporting all-purpose allowances

You must separately report all-purpose allowances against the relevant allowance type. It’s important that these allowances can be identified because they’re treated differently in different situations, and not being able to identify them may disadvantage your employee.

9. Treating reportable employer super contributions and salary sacrifice as the same thing

When reporting amounts salary sacrificed to super through STP Phase 2, you report the amount of salary and wages your employee sacrificed as salary sacrifice super (salary sacrifice type S).

These amounts are often also considered reportable employer super contributions (RESC). However, it’s important to remember that salary sacrifice super and RESC are different things and if an amount is both salary sacrifice type S and RESC, you need to report it as both in STP.

Additional resource hubs to help you get your STP Phase 2 reporting right:

Feel free to contact Tailored Accounts if you have any questions.

Source: Australian Taxation Office & Australia Taxation Office
Compiled & Edited by Tailored Accounts

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