Single Touch Payroll Phase 2: What happens when your deferral expires?
by Angela Diec
16 June 2022
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The commencement of Single Touch Payroll Phase 2 (STP2) for employers has been a staggered process, which has been dependent on the deferrals that Digital Service Providers (DSPs) have obtained. However, it is important to note that whilst your DSP may have a deferral, this has been obtained so that the DSPs have sufficient time to build the software that acts as a bridge for your payroll data to be transferred to the ATO in an approved format - There is a further, significant step that employers need to consider.
As most of us are aware, the STP2 implementation process involves a wage code mapping exercise, however, sometimes overlooked is the need to reflect on how the required information will flow seamlessly through to the DSP’s purpose built infrastructure to ensure compliance (which will now involve a number of data sources external to the payroll software).
So, whilst the DSP will be ready to report the information to the ATO on expiry of their deferral, it does not guarantee that the information provided to them by their clients for the reporting will necessarily be fit-for-purpose - This responsibility lies solely with the employers.
As a gauge of your STP2 readiness, we have developed an infographic based upon our learnings and ongoing discussions with the ATO and this explores the key processes that will have an impact on your STP2 implementation project. Of significant note, the considerations listed in the infographic are independent of the role that your DSP plays in the STP2 process. Addressing these points will help ensure that the information you provide to your DSP is complete and will achieve the correct reporting outcomes.
Remembering it takes a significant amount of time to ensure that processes are tested, issues are appropriately identified and rectified prior to going live - what do you do if you need more time to test your data flows once the DSP solution is ready and the deferral is set to expire?
Well first, a flag - the ATO has advised that they are unlikely to grant further deferrals of time purely because an employer hasn’t turned their attention to STP2 until the DSP advises they are ready to go.
Rather, requests for further deferrals will require detailed implementation plans that cover what the employer has done to prepare to date, the items that are still yet to be done to prepare for the implementation and potential roadblocks that may prevent the employer from being able to meet desired milestones in the implementation process. In the absence of this level of detail, the deferral request is likely to be denied.
The takeaway? Even if your DSP is still working on finalising its own STP2 update, or even if you have until the end of the year before your DSP’s deferral expires, it is time to start preparing for your transition to STP2 now.
For any questions please contact your Payroll Advisory specialist.
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