Expanding Single Touch Payroll –Phase 2

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

2[OFFICIAL] EXTERNAL

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


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


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


1 January 2022Mandatory start date for Phase 2 reporting

Data only shared for mutual clients

Drivers for Change


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

[OFFICIAL] EXTERNAL 7

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


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


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


1.1M+Child Support

Customers with STP Data

648K+Employers

13.1M+Employers/Employee Relationships

6.5M+Centrelink


7.6M+Customers with STP Data

(Centrelink and Child Support)

397M+Payment events received

As at 21 February 2021

1.1M+Child Support


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


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



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



What is different

Key changes


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


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


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


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.


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


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


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


Expanding Single Touch Payroll –Phase 2

Documents

Transcript of Expanding Single Touch Payroll –Phase 2