Tag: reporting

payroll

Time to transition to STP Phase 2

Posted on | by Allan Hall

All three stages of Xero’s STP Phase 2 rollout are now available

Over recent months, Xero has been keeping us updated on Xero’s Single Touch Payroll (STP) Phase 2 rollout.

This will see businesses build on their existing STP reporting to share more information with the ATO and other government agencies whenever you process a pay run.

Xero has now announced that all three stages of the rollout are available, meaning you can get your payroll data STP Phase 2 ready today. 

Not sure where to start? Xero has compiled all the information you need.

Xero’s STP Phase 2 reporting deferral is through to 31 March 2023, meaning Xero Payroll customers will have until the New Year to activate STP Phase 2. However, we strongly recommend getting your payroll data ready as soon as possible to stay ahead of this important compliance deadline.

How to complete each step of your transition to STP Phase 2 in Xero 

To start your transition now, head over to the STP Phase 2 Portal in Xero Payroll to progress through each of the following steps: 

Step one

The first part of this process is transitioning your existing employee profiles to be STP Phase 2 compliant. This means providing new details, like whether they’re an employee or contractor. Step one also includes providing additional information when onboarding new employees to Xero Payroll. More information can be found here.

Step two

You’ll need to identify and update certain pay items with the new earnings categories defined by the ATO for STP Phase 2 reporting. This is because gross amounts for each income type will now need to be reported as a separate itemised amount, like overtime or allowances. Head to Xero Central for more details, including a breakdown of the different earnings categories.

Step three

This is the final step in the STP Phase 2 transition which will break down paid leave into additional subcategories. Xero supports users with a guided experience in payroll so you can easily update existing paid leave types to meet the new ATO reporting requirements. You may also find that some of your leave pay items already have the correct reporting category assigned. Visit Xero Central to learn more about this stage.  

TIP: Remember to mark each step as complete in the STP Phase 2 Portal before moving forward. This ensures your payroll data is accurate and could help reduce filing errors later down the line.

Reporting all purpose allowances

With STP Phase 2, all purpose allowances must be disaggregated, meaning they’re reported separately to the employee’s hourly or ordinary earnings rate. 

In Xero Payroll, you can create a separate allowance pay item with the appropriate type for each allowance included in the all purpose amount. You will also be able to select an option for the allowance to be included in the calculation of overtime and paid leave rates.

This is intended to reduce the manual burden on payroll admins to calculate and adjust an employee’s overtime or paid leave within their payslip. This occurs when an employee’s award states that both the allowance is to be paid for all purposes — including when calculating leave and overtime. Head to Xero Central for more information on these changes.

There’s no time like the present – start transitioning your payroll data today 

Now that all three stages of Xero’s STP Phase 2 rollout are available, it’s time to transition your payroll data. As we come closer to the deadline, the sooner you can tick this off your to-do list, the more prepared you’ll be.

Remember, all employing Australian businesses must become STP Phase 2 compliant. So if you’re working with Allan Hall to make the transition, keep in mind that our accountants are also helping others to do the same. Stay patient as we work through the process, and in the meantime, check out Xero’s Resource Hub or Xero Central for more information.  

Further support

To help you navigate the transition to STP Phase 2, Xero has created a comprehensive guide. This has what you need to know (and do) to make the move, from step-by-step instructions to detailed explainers on leave, earnings and reporting categories. 

Looking for more information? Head to Xero Central or refer to the ATO’s employer reporting guidelines.

What’s more, Allan Hall’s Accountants are also here for support, so reach out if you need further guidance from our team of Xero Certified Advisors.

CONTACT ALLAN HALL

Xero STP Phase 2 leave transition

Xero STP Phase 2 rollout

Posted on | by Allan Hall

Everything to know (and do) for the final stage of Xero’s STP Phase 2 rollout

By now, most business owners are probably familiar with Xero’s approach to getting payroll data ready for Single Touch Payroll Phase 2.

This will see businesses build on their existing STP reporting to share more information with the ATO and other government agencies each time employers process a pay run. And the good news is, Xero now arriving at stage three – the final stage of their transition to STP Phase 2.

Xero’s STP Phase 2 reporting deferral deadline is now 31 March 2023 meaning Xero Payroll users will have until the New Year to activate STP Phase 2. However, you can get your data ready today. In fact, it is recommended that you complete each stage sequentially as they are made available in Xero Payroll.

The three stages of transitioning to STP Phase 2 in Xero

Stage one – Delivered in August: The first part of this process is transitioning your existing employee profiles to be STP Phase 2 compliant. This stage also includes providing additional information when onboarding new employees to Xero Payroll.

Stage two – Delivered in September: You’ll need to identify and update certain pay items with the new earnings categories defined by the ATO for STP Phase 2 reporting.

Stage three – Rolling out from late October: This is the final stage in the STP Phase 2 transition which will break down paid leave into additional subcategories. We’ll support you with a guided experience in payroll so you can easily update existing paid leave types to meet the new ATO reporting requirements.

So you’re ahead of the deadline, it’s best to transition your payroll data as soon as possible. Head over to the STP 2 Portal in Xero Payroll to progress through each stage.

Stage three involves the introduction of new paid leave categories

STP Phase 2 introduces a set of new ATO reporting categories for use in your leave pay items. You will need to categorise any existing paid leave types you have set up in Xero Payroll. The categories available include:

Other paid leave (Type O)

  • Annual leave
  • Compassionate and bereavement leave
  • Family and domestic violence leave
  • Long service leave
  • Personal (sick/carer’s) leave
  • Rostered day off
  • Special paid leave
  • Study leave
  • Time off in lieu

Ancillary and defence leave (Type A)

  • Community service leave
  • Defence reserve leave
  • Jury duty leave

When these types of leave payments are correctly categorised in STP filing, the data can be more easily shared across government departments (like Services Australia). Learn more about the process of updating leave categories in Xero Payroll here:

Xero will be launching the leave pay item transition tool to help you with this final stage and has built a transition tool to assist you with easily categorising your existing leave pay items to meet STP Phase 2 reporting requirements. Xero has also been rolling out changes to Xero Payroll in preparation for STP Phase 2. As a result, it’s likely that some leave pay items may already have the correct reporting category assigned.

What Xero Users need to do now

Head to the STP 2 Portal in Xero Payroll and progress through each stage of the transition process to get your payroll data ready for Phase 2 reporting.

  • Stage one: Updating employee records to meet the new STP Phase 2 filing requirements.
  • Stage two: Updating income pay items to the new STP Phase 2 filing requirements.
  • Stage three: Categorising your existing paid leave types to the new filing requirements.

It’s important to mark each stage as complete in the STP 2 Portal before moving forward. This ensures your payroll data is accurate and could help reduce filing errors later in the financial year. Once you’ve completed all three stages, your business will be ready to switch to STP 2 later in the financial year.

Xero will be ready to report your updated payroll data to the ATO by mid-December 2022. While there is a deferral until 31 March 2022, we strongly recommend that you get your data ready for the transition as early as possible. If you’re unsure about updating your payroll data for STP Phase 2, contact our Bookkeeping team on 02 9981 2300.

CONTACT ALLAN HALL

person writing and typing on laptop

STP Phase 2 reporting errors

Posted on | by Allan Hall

Getting STP Phase 2 reporting right

Single Touch Payroll (STP) Phase 2 reporting started on 1 January 2022.

So far, more than 200,000 employers have started reporting STP Phase 2 information for over 3 million individuals.

We’ve noticed some mistakes people are making as they move to STP Phase 2 reporting and are sharing the most common mistakes so you can avoid them, such as:

  • re-mapping pay codes or categories incorrectly. Check if you have pay codes for items you need to list separately, such as bonuses, commissions and overtime
  • continuity of year-to-date (YTD) reporting. If the solution you use requires you to input your existing YTD amounts manually; make sure you bring over all the amounts you need to
  • incorrectly categorising allowances. You must report all allowances separately in your STP Phase 2 reporting, which includes 8 allowance categories and one for ‘other allowances’. Only report an amount as an ‘other allowance’ if it doesn’t fit into one of the 8 categories.

Related reading

Expansion of STP (Phase 2)

CONTACT ALLAN HALL

hand holding cryptocurrency keychains

Potential cryptocurrency tax implications on trades

Posted on | by Allan Hall

Heard of Bitcoin, Ethereum and dogecoin?

These are a few common cryptocurrencies available in the digital world.

“Crypto” is a virtual currency that nobody controls and there are no physical notes or coins, it’s a transfer of digital assets. That’s right “assets” which triggers crypto tax that you need to be mindful of when preparing your tax return.

In the last few years, the ATO has been targeting crypto and it’s important to understand the tax consequences of owning these cryptocurrencies.  If you sold, bought or earned interest from crypto during the last financial year, you’ll need to declare this in your next tax return. The ATO has information when you sign up to Australian crypto exchange or wallets and they are increasing their number of sources to track this data.  So, if you have dabbled in crypto, it’s best to speak to your accountant and let them know of your crypto transactions so you don’t get caught out.

Crypto gains can be a very complicated topic to understand as it will depend on your personal circumstances as well as the specific transactions you’re making. Generally, like any asset you own, if you sell or trade/exchange a crypto this is a tax event and the gain or loss on this will need to be reported in your tax return.

Disposing of one cryptocurrency to acquire another cryptocurrency is also treated by the ATO as a taxable event. As there is no physical money being received in this type of exchange, the market value of the cryptocurrency you receive needs to be accounted for in AUD dollars.  

The ATO has confirmed that when you’re moving crypto around between your own wallets, this is not a disposal and you don’t need to report it (i.e. not sold or exchanged to another form of crypto and not transferred into someone else’s name as beneficiary). This is because you retain ownership of them and they remain in the same currency.  However, you need to keep track of the original costs and fees on transfer of the transferred coins and keep sufficient proof of it.

There is software available to help track and store this data such as Koinly, Ledger Vault and CoinTracker to name a few. Each provides a summary of the buys, sells, gains, losses and portfolio summary for the financial year as well as a detailed tax report.   

The most important thing to remember is to keep a record of all your transaction events and to disclose your transactions to your accountant so we can assess and advise on the potential tax implications of how you trade.

CONTACT ALLAN HALL

person writing and typing on laptop

Single Touch Payroll Phase 2

Posted on | by Allan Hall

What every small business needs to know

Single Touch Payroll (STP) Phase 2 means every business that employs staff will be required to get on board with the expanded program.

STP Phase 2 requires additional information to be reported to the ATO, enabling other government agencies to leverage the STP infrastructure to receive information and support the administration of the social security system.

Single Touch Payroll Phase 2 in a nutshell

With STP Phase 2 reporting live from 1 January 2022, there’s expanded capturing and sharing of payroll and employee data as compared to the original rollout of Phase 1.

This extended capturing by the ATO is shared more widely with relevant government bodies – such as social services – and fills certain gaps in payroll information sharing that wasn’t previously being transmitted. This new data remit remains an automated process, handled through STP-compliant payroll software such as cloud accounting apps and payroll systems.

What the new is data being shared?

The ATO is looking to patch knowledge gaps in the payroll submission process to support social security purposes and get a better understanding of employee payment details.

So, in addition to the payroll and employee information you’re already sharing through STP Phase 1 (salaries, PAYG, superannuation), Phase 2 involves capturing the following pay items, employee records and new fields:

  • employment basis
  • paid leave
  • allowances
  • overtime
  • cessation details and termination reasons
  • child support deductions
  • salary sacrifice
  • lump sum payments
  • country codes

Under STP phase 2 reporting employers are also required to separately itemise the components which make up the gross earnings amount by reporting all allowances separately, not just expense allowances that may have been deductible on an employee’s individual income tax return.

Digital Service Providers (DSPs)

STP Phase 2 requires employers to fill out employees’ payroll data correctly in your chosen software solution. Be sure to use a DSP that can roll out compliance updates to their software.

Updates to STP will be made by DSPs on users’ behalf and they are working with the ATO to ensure timely and competent compliance and delivery. Employers are already filling out this payroll information, so there are no new fields to capture on your end. In this sense and the automated nature of STP, employers are not required to do anything further than what is already being done under Phase 1.

What it will do is decrease the compliance burden upon businesses in terms of reporting. For example, under Phase 2 employers are no longer required to submit TFN declaration forms.

What will not be changing

The rollout of STP Phase 2 following does not change:

  • the way Single Touch Payroll is reported
  • Single Touch Payroll reporting dates (on or before payday)
  • the types of employee payments required for Single Touch Payroll reporting
  • employers’ current tax and super obligations
  • end of year finalisation requirements and submission responsibilities

The next stage of the Single Touch Payroll (STP) journey is underway

STP Phase 2 will see businesses build on their existing payroll reporting to share more information each pay run.

Most employers are now reporting through STP. You will need to start reporting if you have not yet transitioned, unless you have an exemption or a deferral.

What do business owners need to do?

If you’re currently STP compliant with payroll software that’s enabled, you should be running your payroll as usual. If you’re a Xero or MYOB user, your DSP will confirm when your solution is ready for STP Phase 2 reporting.

If you have any queries or concerns over your payroll solution or if you need reassurance, please consult your Allan Hall bookkeeper or accountant.

CONTACT ALLAN HALL

Related reading

Expansion of STP (Phase 2)
payroll

Expansion of STP (Phase 2)

Posted on | by Allan Hall

Single Touch Payroll (STP) is part of the government’s commitment to streamlining employer reporting obligations

Most employers are now reporting through STP. You will need to start reporting if you have not transitioned yet unless you have an exemption or a deferral.

In the 2019–20 Budget, the government announced that STP would be expanded to include additional information.

Including this additional information will:

  • reduce the reporting burden for employers who need to report information about their employees to more than one government agency
  • support the administration of the social security system.

The mandatory start date for STP Phase 2 reporting was 1 January 2022 however the ATO is working with Digital Service Providers (DSPs) that are updating their solutions to support Phase 2 reporting. Your DSP will confirm when your solution is ready:

  • Xero users have until 31 December 2022 to start reporting the additional information required for ATO STP Phase 2 (See STP Phase 2: Steps for a successful transition)
  • MYOB has obtained a deferral from the ATO which means users have until 1 January 2023 to move to STP Phase 2.

Some DSPs, despite their best efforts, will need more time to get ready and transition their customers. They will advise you if the ATO has approved a deferral for users to start reporting later than the mandatory start date.

If you can transition to STP Phase 2 reporting when your solution is ready, then you do not need to ask the ATO for more time.

If you need more time in addition to your DSP’s deferral, you must apply. See STP expansion (Phase 2) delayed transitions.

CONTACT ALLAN HALL

Related reading — what small businesses need to know about STP Phase 2

Single Touch Payroll Phase 2
australian dollars

Shadow economy

Posted on | by Allan Hall

ATO cash job crackdown

The term ‘black economy’ has changed to ‘shadow economy’. This change has been made to reflect the Organisation for Economic Co-operation and Development’s (OECD) definition of unreported or dishonest economic activity.

The shadow economy affects all Australians. It refers to dishonest and criminal activities that take place outside the tax and regulatory systems.

Although most people do the right thing, some people and businesses deliberately avoid paying the right amount of tax. For information on how this is being addressed, see the ATO’s Our focus.

Those who participate in the shadow economy reduce the funds available for essential community services, such as:

  • health care – including Medicare and hospitals
  • disaster response – for example, during bushfires, floods, droughts, COVID-19
  • education – including schools and teachers
  • transport and infrastructure – including airports, roads and railways.

For details on how this affects everyone, see The shadow economy explained.

The ATO is committed to tackling the shadow economy and creating a level playing field – see The whole-of-government shadow economy action plan.

CONTACT ALLAN HALL

payroll

Single Touch Payroll changes

Posted on | by Allan Hall

There have been changes to Single Touch Payroll (STP)

Employers are required to report additional payroll information now or once your payroll product is ready.

You need to start reporting additional information on or before each payday — this is known as STP Phase 2.

STP Phase 2 started on 1 January 2022

Some Digital Service Providers (DSPs) need more time to update their payroll software products and transition users. If your DSP has a deferral, this covers you.

It’s important you understand which of the following circumstances apply to you:

  • Your payroll product is ready — it’s time for you to start STP Phase 2 reporting now or have a plan in place to transition as soon as possible
  • You are covered by a DSP deferral — know when your product will be ready and that you are ready to start Phase 2 reporting when it has been updated, or no later than the first payday after your DSP deferral expires:
    • MYOB 01/01/2023 — however MYOB does have this updated in their program for people to start to update
    • Xero 31/12/2022
    • Reckon Products 01/01/2023     
  • Your payroll product is not being updated to offer STP Phase 2 reporting — your DSP will let you know if they have another product you can use. If not, you’ll need to choose a product that offers STP Phase 2 reporting.

If you’re unsure as to which of these circumstances applies to you, speak with your provider or your tax and BAS professional.

What you need to do

Many DSPs are releasing changes progressively. Your DSP will provide you with instructions so it’s important to follow them.

The ATO has compiled some resources to help business owners to understand the changes and prepare. These include a factsheet, checklist and detailed reporting guidelines which outline the STP Phase 2 reporting requirements. These can be accessed at ato.gov.au/STPresources.

The additional STP information is intended to help Services Australia customers, who may be your employees, get the right payment. It will also reduce the need for you to provide information about your employees to multiple government agencies.

Need extra time to transition?

You can apply for a delayed transition if you need more time to start STP Phase 2 reporting. Visit ato.gov.au/delayedstp2transitions to find out how to apply.

CONTACT ALLAN HALL

Northern Beaches Sydney cafe

JobSaver Reconfirmation Clarification

Posted on | by Allan Hall

Further clarification on JobSaver reconfirmation requirements and program deadline reminder

The advice provided by Service NSW relating to the requirement to confirm eligibility, and the making of automatic payments of JobSaver, has changed frequently over recent weeks.

We understand this has been challenging and clarify the situation as follows:

Oscillating in and out of JobSaver

Due to the requirement to confirm eligibility each fortnight, it is possible that a business or not-for-profit organisation (NFP) can oscillate in and out of JobSaver until the end of the program.

A business or NFP can oscillate in and out of JobSaver from 11 October 2021, depending on whether they continue to experience a decline in turnover of 30% or more due to the public health order for a particular fortnight.

Payments were made for the three fortnight periods from 30 August to 10 October 2021 — from 30 August to 12 September 2021, 13 September to 26 September 2021 and from 27 September to 10 October 2021 — irrespective of whether the business confirmed its eligibility.

The position may be summarised as follows:

  • Businesses eligible for JobSaver payments for the three periods above and either confirmed they were eligible or did not confirm whether they were eligible, will have automatically received JobSaver payments for those three fortnights. They will receive a reminder email for the period from 13 September to 26 September 2021 and for the period from 27 September to 10 October 2021, and each fortnight thereafter.
  • Businesses that are ineligible for JobSaver payments for any or all of the three periods but either confirmed they were eligible or did not confirm whether they were eligible, will have automatically received JobSaver payments for those three fortnights. The business should contact Service NSW to advise they are ineligible for these JobSaver payments.
  • Businesses that are eligible but confirmed they were not eligible for the period from 30 August to 12 September 2021 will not have received an email to reconfirm for the period from 13 September to 26 September 2021, or from 27 September to 10 October. They should contact Service NSW to arrange for confirmation of eligibility for these periods.
  • From 11 October 2021 until the end of the program, a business will receive a payment only if they confirm they are eligible for the particular period. A reminder email will be sent every fortnight so businesses can reconfirm whether they are eligible for each period.
  • A business will not be able to confirm eligibility for any period until the preceding fortnight has been confirmed.
  • The fortnight from 30 August to 12 September 2021 has been removed from the confirmation webpage. Confirming eligibility for this period is not required. This does not affect the making of payments for that fortnight, but it has allowed businesses to reconfirm their eligibility for the fortnight from 13 September to 26 September 2021 without having to confirm the fortnight from 30 August to 12 September 2021.
  • Any business that is ineligible and has received an overpayment will need to repay any overpayments. Service NSW will advise the mechanism for repaying overpayments soon. In the meantime, sit tight and set aside the funds so they can be readily repaid when required.

There will be further updates ahead and we will continue to support you and provide further information as it becomes available.

CONTACT US