Contents

Overview - what is it all about?

What will change in Accentis Enterprise for STP Phase 2

Getting an upgrade to your Accentis Enterprise version

Things you will need to do before you start using STP2

Questions or concerns?

 

Overview - what is it all about?

What is it?

STP Phase 2 (STP2) is the second major revision of Single Touch Payroll reporting to the ATO. It includes a number of changes around the amount of detail in the payroll data that is sent to the ATO when your staff are paid.

But before you go any further... don't stress! We're handling all the behind-the-scenes changes and will let you know of any changes that are required on your end. It's not that onerous and it is not asking for information that you don't already know.

Why is it happening?

It's about making more payroll data visible to more parts of government, in particular Services Australia. This is to help reduce other reporting obligations for businesses and individuals to government departments.

The ATO will also use the information to more accurately determine the type of work people do, the reasons why they have been taxed and paid the way they have, and the circumstances of an employee's termination. It's all about data matching and compliance, and the benefit to business and employees is significant in terms of paperwork reduction (remember how we all used to do paper income tax returns and can now do it all online?!)

A crash course summary of the changes

Employee income streams and country of origin

The ATO now require an "income stream" classification for employees to define the type of income they are earning and which country they are from. This helps the ATO:

• identify payments you make to employees that affect their tax differently to other employees
• make it easier for employees to complete their own tax returns
• identify where you have a concessional reporting arrangement
• identify the country of origin for working holiday makers.

Tax treatment information on tax scales

Tax scales are being changed to have more information and include an internal tax treatment that defines why a person is being taxed the way they are.

More termination types

There is an expanded set of termination types that provide more information about the circumstances of employment termination. This should remove the need for Employment Separation Certificates as all the details will be submitted via STP2.

Finer classification of payment types

The ATO has expanded the list of payment types (you will see these on your Pay Items). Previously, for allowances and deductions, you had to tell the ATO what kind of allowance or deduction it was. Now, this classification extends to any type of payment including income so that the ATO knows what type of income it was (e.g. ordinary time vs overtime).

What is NOT changing?

The good news is that for most people, the way you process your pay runs and collect data will not be changed. It is really only the definition and additional information provided that will change.

The following will also not change:

• the way you lodge
• the due date
• the types of payments that are needed
• tax and super obligations
• end of year finalisation requirements

ATO resources and links

Here is a great link that will lead you to a wealth of information from the ATO about STP2.

Accentis will help you through it!

As always, we are here with you every step of the way. Don't be scared or worried about what it all means - just let us know if you have any concerns and we will help you out. Remember, you have already been lodging with STP Phase 1 so you have pretty much done it all before.

Timing

We will be transitioning all customers to a new version of Accentis Enterprise in the first few months of 2022. This won't impact your day-to-day business other than the normal small downtime for upgrades.

Accentis has been granted a deferral until June 30, 2022 to transition all customers and if you don't think you will be ready on time, you can apply for a further deferral.

 

What will change in Accentis Enterprise for STP Phase 2

Summary of changes

Here is a summary of all of the changes that you need to know about:

• New option to activate Phase 2 so that it can be activated when you are ready
• Changes to Tax Scale information to include a tax treatment type for each scale
• Changes to the Employee data to include an income stream, country of origin and employment basis
• Changes to Pay Run information to include an employee's income stream
• Changes to the Pay Item setup data to use a payment type instead of the payment summary position and allowance types
• Changes to termination information to include more termination types

New option to activate Phase 2

A new option has been added to activate STP2. You shouldn't change between the two, but this will allow us to upgrade everyone's software and then give you time to set up the new information if needed before you start lodging with the new information.

Until you have made any changes needed for STP2, you will still be able to lodge your data with STP 1 - just like you have been doing.

Changes to Tax Scale information

Tax scales have new information in them that defines more accurately to the ATO what they are being used for and the tax treatment of the employees who use them.

While we have data all set up for standard tax scales, you will need to set your own for custom scales.

Changes to the Employee data

Income stream

Employees now have an Income Stream selection that defines what kind of income they are earning.

• SAW (salary and wages) - this is the most common income type and was formerly known as individual non-business (INB).
• CHP (closely held payees) - applies when the payee is directly related to the employer, such as family members. If you are using the concessions available to closely held payees, you must report these payments under this income type. This type of income was formerly included in SAW.
• WHM (working holiday makers) - applies to temporary visitors to Australia who hold a Working Holiday Visa (subclass 417) or Work and Holiday Visa (subclass 462).
• FEI (foreign employment income) - applies to 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. There are rules for reporting Foreign Employment Income.
• IAA (inbound assignees to Australia) - some multinational payers exchange, or transfer, payees between affiliated entities in different tax jurisdictions. if you are using the concessions available to inbound assignees to Australia, you must report these payments under this income type. This type of income was formerly included in SAW.
• SWP (seasonal worker programme) - applies to regional programmes for government-approved employers, administered by the Department of Employment, Skills, Small and Family Business. This type of income was formerly included in SAW. This does not include workers under the Pacific Labour Scheme which are recorded as SAW.
• JDP (joint petroleum development area) - before 1 July 2020 only.
• VOL (voluntary agreement) - applies to contractors paid under a voluntary agreement.
• LAB (labour hire) - applies to payments by a business that arranges for persons to perform work or services, or performances, directly for clients of the entity. Income for contractors only - does not include employees. Employees of labour hire firms should be reported as the relevant income type, such as SAW.
• OSP (other specified payments) - this is a limited income type that only applies to specified payments by regulation 27 of the Taxation Administration Regulations 2017

An employee can only be associated with one income stream, so if there is a rare situation where one of your staff is performing a role that crosses two income streams, then two separate pay runs will need to be performed and the income stream set on each one separately.

Country of Origin

You must report the country code for employees that are paid the following income streams:

• Foreign employment income (FEI)
• Inbound assignees to Australia (IAA)
• Working holiday makers (WHM)

If you make payments to:

• An Australian resident working overseas - Use the host country code
• A working holiday maker or inbound assignee - Use their home country code

Employment Basis

There are now 7 classifications for employment basis

• Full time (F) - a person who is engaged for the full ordinary hours of work as agreed between the payer and the payee and/or set by an award, registered agreement or other engagement arrangement. A full-time payee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
• Part time (P) - a person who us engaged for less than the full ordinary hours of work, as agreed between the payer and the payee and/or set by an award, registered agreement or other engagement arrangement. A part-time payee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
• Casual (C) - a person who does not have a firm commitment in advance from a payer about how long they will be employed or engaged, or for the days or hours they will work. A casual payee also does not commit to all work a payer may offer. A casual payee has no expectation of continuity of the employment or engagement.
• Labour hire (L) - a contractor who has been engaged by a payer to work for their client. Income for contractors only, does not include employees.
• Voluntary agreement (V) - a contractor with their own ABN who has entered into a voluntary agreement with a business to bring work payments into the PAYG withholding system. To do this a contractor would normally complete a Voluntary Agreement for PAYG Withholding form.
• Death beneficiary (D) - the recipient of an employment termination payment (ETP) death beneficiary payment who is either a dependant, non-dependant or trustee of the estate of the deceased payee.
• Non-employee (N) - a payee, such as a contractor, who is not in scope of STP for payments but may be included in STP for voluntary reporting of superannuation liabilities only.

Changes to Pay Run information

A pay run now defines an Income Stream for the employee on that pay run. While it defaults to the income stream normally associated with each employee, it can be changed on a per-pay run basis so that the ATO knows, at any point in time, what kind of work the person was doing.

Changes to the Pay Item setup data

A new payment type has been added to each pay item that more accurately defines exactly what that payment is for. This replaces the Payment Summary Position (which replaced the older Group Certificate Position).

The standard pay items in Accentis Enterprise have already been allocated to the correct payment type, but you may have your own pay item defined that needs to have their payment type reviewed and checked.

Changes to termination information

Some further classification has been added when you terminate an employee, to more accurately define the circumstances or nature of the termination. With these new details being submitted through STP2, there will no longer be the need to issue an Employment Separation Certificate to either the employee or Services Australia.

 

Getting an upgrade to your Accentis Enterprise version

We already know which version you are using and whether or not you have been upgraded to STP2. We will ensure that everyone has been upgraded in plenty of time to do their checks and review of pay items and employee income streams.

The new version of Accentis Enterprise that contains STP2 will be version 6.18.302 or later.

We will contact you about an upgrade

We will be rolling out upgrades in stages and will contact you when it is your turn for an upgrade. The upgrade process will be much like any other upgrade you have had before and will also include changes that are unrelated to STP2. We will give you a full set of release notes prior to the upgrade.

Data that will be automatically converted and upgraded

When you receive the new version of Accentis Enterprise, the following data will be automatically converted by the upgrade process:

• All employees will default to an income type of "Salary and Wages"
• Any previously-terminated employees will have their termination type automatically set to the appropriate type
• All internal tax scales will be converted and to have the correct Tax Treatment configuration for that tax scale
• The Payment Type (replaces the payment summary position field) will have been converted to a default payment type for that pay item.

 

Things you will need to do before you start using STP2

Once you receive your upgrade, some of the changes will require review of your data and in some cases, re-classification of pay item or employee information to be more accurate. Here are the things that you will need to review to ensure that they are being reported according to the ATO's requirements.

These changes can be made in advance of using STP2 (because we have included an option to continue using STP1 while you get this data sorted out).

Income stream

Each employee will belong to an income stream. We can't tell what it should be for each employee, so you need to review and classify your employees into the correct stream.

Each employee's income stream will default to Salary and Wages, which for most employers will cover nearly all of their staff.

Custom tax scales

Each tax scale now has a "tax treatment" and if you have customised tax scales, you will need to set this tax treatment before you can use the tax scale for the first time in STP2. If you are using the standard tax scales that we distribute, then you will not have to do anything.

Pay item "payment type" check

Every pay item, even income, now has a payment type that classifies it into one of several new categories. The main change here is that now income types also need to be classified.

The upgrade process will have assigned what we believe is the most appropriate income type for your pay item, however it is recommended that you review all of your pay items to ensure that they are classified correctly.

How the old Payment summary positions are translated to STP2 Payment types

When you transition from STP to STP2, your old Payment Summary positions will be automatically mapped to the new "Payment Types". These will be ok for most situations, but you will still need to check that they are appropriate for your particular setup.

The table below shows how they will be translated:

 

Payment summary position	New STP 2 Payment type
Superannuation - Gross payment with Super and Reportable ticked	SUPER
Superannuation - Gross payment with Super, Salary sacrifice and Reportable ticked	SALARY SACRIFICE
Deductions with Deduction type: Fees	Deductions (Fees)
Deductions with Deduction type: Workplace giving	Deductions (WPG)
Allowances (1,2,3,4) with Allowance type: Car	Allowance (Cents per km)
Allowances (1,2,3,4) with Allowance type: Transport	Allowance (Award Transport payments)
Allowances (1,2,3,4) with Allowance type: Laundry	Allowance (Laundry)
Allowances (1,2,3,4) with Allowance type: Meals	Allowance (Overtime meal allowance)
Allowances (1,2,3,4) with Allowance type: Travel	Allowance (Domestic and overseas travel and overseas accommodation)
Allowances (1,2,3,4) with Allowance type: Other	Allowance (Other)
Lump sum A	Lump sum A (T)
Lump sum B	Lump sum B
Lump sum D	Lump sum D
Lump sum E	Lump sum E
Leave loading - Gross payments with Pay item type: Leave loading	Other paid leave
Leave - Gross payments with linked to PL and AL (taking)	Other paid leave

 

Questions or concerns?

As with everything in Accentis Enterprise, if you have any questions or concerns, or if you are just having a bit of stress and want to hear that it is all going to be okay - just let us know!

All support free of charge if you are on our Software Upgrade Program

Because this is part of our upgrade plan, all questions or information you need about how to use these new features will not be charged providing your questions are emailed so that we can prioritise them appropriately.

Commonly asked questions

I heard that all of this has to happen by January 1, 2022. Is that right?

January 1, 2022 was the initial deadline, but Accentis has received a deferral until June 2022. We will make sure you have enough time to upgrade and configure for the changes well before a mandatory deadline. However, you may be able to apply for an addition extension beyond our deferral date if you require it.

What if I have problems working out how to configure the STP2 data?

Easy! Just contact us and if we can't help, then the ATO can always help as well.

Do I need to reprocess payroll for periods before transitioning to STP2?

No. You do not need to make any changes to payroll data that has been processed prior to your switch over to STP2.

The ATO requires an extra code to be added for the Payment type, how do I add the extra code?

Some payment types require extra code information to be reported to the ATO, this extra code needs to be added to the Pay items description.

As an example - A car allowance paid at a flat rate is generally reported with the Payment type “Allowance: Other allowance” and requires an additional code of “V1” to be reported to the ATO. The “V1” code needs to be added to the Pay items Description as the first characters, showing as “V1 – Fixed car allowance” or similar.

 

Last edit: 23/12/21