STP Phase 2 has many benefits for employers, and employees. The changes will assist streamlining information between ATO and Services Australia, making it easier to interact with Centrelink and Medicare as well as automating TFN declarations straight to the ATO.

Make sure you check and understand when your digital service provider (your software payroll provider or product i.e. Xero) will update their product and be ready for the new reporting requirements. Most providers are releasing the changes progressively and have already introduced some of the updates so you can start preparing for the change now.

Whilst you’ll need to start reporting more information to the ATO, some things will stay the same, such as;

• the way you file your pay run to the ATO
• the due date for your report
• the types of payments to be reported
• tax and superannuation obligations
• end of year finalisation requirements

If you are a Xero user, new information fields are now available in Xero Payroll to help to prepare employers for this transition to the new mandatory reporting. These fields include updated employee pay codes and the types of allowances available.

Xero have also provided some helpful guides on their website:

Xero and STP Phase 2 CHECKLIST

Please note that Xero customers are currently covered by a deferral secured with the ATO until 31 December 2022.