Keeping up with Australian payroll and STP phase 2 compliance

Increased workplace flexibility has created complexity in payroll functions. At the same time, automation has reduced the risk of errors and freed up payroll professionals to focus less on manual tasks and more on innovative and strategic people-management initiatives. This yields a net positive result for organisations that can manage the increasing complexity effectively.

Meanwhile, uncertainty continues to affect the economy, and regulations and laws are adapting to keep up with new trends and incentivise market fairness. To remain compliant with payroll standards, it's important to partner with a payroll vendor that is ahead of the curve with requirements in your industry.

Compliance obligations for Australian organisations processing payroll continue to evolve year-on-year. 2022 sees the introduction of Single Touch Payroll (STP) phase 2 and the expanded reporting requirements for employers.

Some key things to know about this significant change in payroll reporting obligations are:

  1. STP came into effect in 2018, requiring Australian organisations to report employee payroll information, including tax and super, to the Australian Taxation Office (ATO).
  2. The purpose of STP is to minimise the administrative reporting burden on employers and to create an efficient process for managing employee payroll data.
  3. As of January 2022, STP expanded into phase 2. This new phase will streamline reporting processes for employers who need to report information about their employees to multiple government agencies.

STP phase 2 will also help Services Australia’s (Centrelink) customers get the right payment at the right time when needed in the future. Under STP, employers are obligated to report employee payroll information to the ATO. Phase 1 reporting requirements are still in place; however, with STP phase 2 employers will need to provide additional information. For example, it’s now essential to break reporting down to include:

  • gross earnings
  • bonuses and commissions
  • overtime
  • child support payments
  • workers compensation
  • paid leave
  • allowances
  • salary sacrifices
  • director’s fees
  • lump sums

Employee information reported through a tax file number (TFN) declaration and employment separation certificate will also be included in the reporting. You can access the phase 2 reporting guidelines on the Australian government website for complete details on the changes to reporting.

Automate the difficult parts to focus on business process improvement

Automating certain processes can help you take advantage of new opportunities and complete business-as-usual activities more quickly and easily. As compliance requirements increase and complexity grows, manual systems create opportunities for human error, which can become costly and cause reputational damage. Automated systems can prevent these errors, resulting in time and cost savings for the organisation.

Payroll technology is advancing rapidly, making it easier for organisations to deal with these challenges. Market-leading software solutions are ready to help you deliver on your STP phase 2 reporting obligations right away. It’s important to note that in a saturated market, there are many payroll vendors that have deferred their customers until the back end of 2022.

As a market leader, UKG solutions deliver everything from payroll processing and HR administration, to time keeping, rostering, and leave management; UKG Payroll is accredited to deliver upon STP 2 today.

Are you looking for a payroll solution that is ahead of the compliance curve and STP phase 2 ready? Download the Single Touch Payroll Phase 2 Datasheet to learn more about UKG Payroll, get a better sense of your reporting obligations in phase 2, and see how you can leverage better tools for automation.

To find out more about how UKG can help your organisation, contact our team today.