The mandatory start date for STP Phase 2 reporting was on 1 January 2022. Additional information is required to be reported in STP Phase 2. However, for employers who need to report information to multiple government agencies, Phase 2 should reduce that reporting burden.
Due dates and late transition
Many Digital Service Providers (DSP) were unable to get their platforms ready for STP Phase 2 reporting by 1 January 2022. In this case, the DSP will apply for a deferral on behalf of their customers (you would have been informed by your DSP if a deferral applied to you).
If your DSP is ready on 1 January 2022, you should:
- Start Phase 2 reporting on 1 January 2022.
- Start by 31 March 2022, otherwise you must apply for more time.
As these dates are well in the past now, what should be done? If you need more time:
- You can apply for more time to make the transition beyond whatever your DSP’s deferral date was. A registered tax agent can also apply on your behalf.
- There won’t be any penalties until 31 December 2022 for genuine mistakes in the setup of Phase 2 reporting.
To summarise this, you should apply for more time to transition, and aim to transition by 31 December 2022 to avoid penalties.
Benefits of Phase 2 reporting
For employers:
- You will no longer need to provide your employees’ tax file number (TFN) declarations.
- You will be able to convey more information by simply selecting an income type. For example, closely held payees.
- You will not need to provide lump sum E letters to your employees.
Benefits for employees include:
- A better ability for the ATO to pre-fill more of your tax return. This is possible because the ATO will have better visibility of the types of income you have earned.
- The ATO will be able to inform the employer if the employee has missed information that may lead to them receiving a tax bill. An example of this is an employee forgetting to disclose any student loans they may have.
Integration with other government agencies will:
- Allow for more information on applications (such as through Services Australia) to be pre-filled.
- Reduce how often government agencies will need to contact customers (as they are receiving more information through STP).
- Reduce the number of documents required on applications.
- Be more accurate with any payments made to customers.
What is remaining the same?
- How you lodge
- Due dates will not change
- Tax obligations
- End of financial year requirements
Source: ATO
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au