Moving to STP Phase 2 after the STP Phase 1 shutdown

There are many things that won't change under STP Phase 2, like:

• how and when you lodge your STP reports

• the types of payments you report

• your tax and super obligations

• end of year finalisation.

You'll need to enter some additional payroll details

To report successfully under STP Phase 2, the ATO require some additional employee and payroll details to be entered into MYOB. This is a one-off task and you'll be guided to enter this information when you first set up STP or when you make the move from STP Phase 1.

• New ATO reporting categories
  ATO reporting categories help the ATO classify the wage, deduction and superannuation payments in your employees' pays. For STP Phase 2, there are some updated and new ATO reporting categories to better classify your employee payments. This includes some new ATO reporting categories like Overtime and Bonuses and commissions that might previously have been reported as Gross payments. Similarly, leave payments were previously reported as gross payments, but now they have their own, more specific ATO reporting categories. Learn more about assigning ATO reporting categories.

• Income type and Home country (Country code)
  The ATO need to know what type of income you'll be paying each of your employees. For a lot of employees this would typically be Salary and wages, but other choices include Closely held payees, Labour hire, or Seasonal worker program. If you choose Working holiday maker, you'll also need to choose the employee's Home country (Country code). You'll find the Income type field via Payroll > Employees > click an employee > Payroll details tab > Taxes tab > Income type.

  

  
  

• Lump sum E payments need the financial year they relate to
  If you've paid a lump sum E payment (an amount of back payment that accrued, or was payable, more than 12 months before the date of payment and is $1200 or more), you'll need to advise the ATO which financial year the payment relates to. For all the details, see this help topic.

Some of your payroll processes will change (for the better!)

• Tax file number declarations
  Under STP Phase 2, when a new employee starts working for you, you won't have to send the ATO a tax file number declaration. Instead, the ATO will be provided all the required information when you report the employee's first pay run via STP. You'll find the employee's tax fine number via Payroll > Employees > click an employee > Payroll details tab > Taxes tab > Tax file number.

• Termination reason
  When you process a final pay for an employee who's leaving your business and you report this termination through the STP reporting centre, you'll need to select the Termination reason. This is now a requirement for both the ATO and Services Australia. Learn more about terminating an employee in Single Touch Payroll reporting.

Your end-of-year reports are clearer

After moving to STP Phase 2, your end of year reports will reflect STP Phase 2 information (Payroll > Single Touch Payroll reporting > EOFY finalisation tab).

• The YTD verification report lists the new ATO reporting categories. In STP Phase 1 this report showed the aggregated gross wages, but it now shows the disaggregated values.

• The Summary of Payments report (accessible by clicking the ellipsis  button for an employee > View summary report (PDF)) only lists pay items that have been used for the employee in that payroll year. Previously all of the employee's pay items were listed, even those with $0.00 values.

1. Sign into your MYOB business at app.myob.com

2. Go to the Payroll menu and choose Single Touch Payroll reporting.

3. Click the the EOFY Finalisation tab.

4. Choose the Payroll year. The Gross Payments (YTD) and PAYG withholding (YTD) values are the total amounts sent to the ATO for all your employees.

5. Click View YTD verification report (PDF).

   

   
   The report displays as a PDF. Take note of the total salary and wages YTD amount. Here's an example:

   

What am I looking at?

• This report shows the total of all ATO reporting category amounts sent to the ATO for all employees.

• The Reconciliation to Payroll section is not sent to the ATO. It shows total gross wages which you'll also see in the Payroll Summary report in MYOB. This amount will differ from the total gross wages reported to the ATO, as it doesn’t include Allowances, CDEP, Foreign Income, ETP components (not ETP Tax), Lump Sum values or any additional reimbursable/employee expenses.

• The ATO Reporting Category section lists the things that have been submitted to the ATO.

• The Total STP gross wages (in the ATO Reporting Category section) doesn't include allowances. This amount should be the same as what's shown in your Payroll Summary report in MYOB, minus any allowances or the other pay components which are listed in the Reconciliation to Payroll section.

• An employee's reportable fringe benefit amounts are reported to the ATO when you finalise, so these won't display on the YTD verification report until after you've completed the finalisation.

1. If you're not already, sign into your MYOB business at app.myob.com

2. Go to the Reporting menu and choose Reports.

3. Click the Payroll tab.

4. Click the Payroll summary report.

5. Set the report filters to cover the entire payroll year (1 July to 30 June).

   

6. Check the YTD total for Salary and wages. Here's our example:

   

   
   

After you've run the above reports, compare the YTD total wage amounts on both. If they match (like in our example), everything is fine.

If the reports don't match

Here are some things to check.

Check your ATO reporting categories

Make sure you've assigned an ATO reporting category to each of your pay items.

1. If you're not already, sign into your MYOB business at app.myob.com

2. Go to the Payroll menu and choose Pay items.

3. On the Wages and salary tab, look for any pay items which are To be assigned. Here's an example:

   

4. If any pay items are To be assigned:

   1. Click the pay item name to open it.

   2. Assign the applicable ATO reporting category. For help choosing the right one, see Assign ATO reporting categories for Single Touch Payroll reporting or speak to your accounting advisor.

   3. Click Save.

Once all pay items are assigned an ATO reporting category, run the YTD verification and Payroll summary reports again (as we did above) to ensure they match. If they do, everything is fine. Otherwise, continue below to check the reported wage values for individual employees. This will help you narrow down your out of balance.

Check reported wage values for individual employees

There are two reports you can use to check the amounts paid to individual employees for the payroll year.

• In MYOB, run the Payroll register report (Reporting menu > Reports > Payroll tab > Payroll register > click the dropdown arrow  for each employee).

• In the Single Touch Payroll reporting centre, click the ellipsis  button for an employee and choose View summary report (PDF). This report shows a summary of all ATO reporting category amounts sent to the ATO for an employee (gross payments, PAYG withholding, allowances, etc.).

 Here's what these reports show:

Send an update event

An update event is where you send your employees' latest year to date payroll totals to the ATO. This ensures your payroll totals in MYOB sync with the figures held by the ATO.

You can send an update event for an employee by recording a $0 pay. This type of pay is also called a void pay and it's like any other pay, but all hours and amounts will be zero.

When you record a $0 pay, the employee's latest year to date payroll totals will be sent to the ATO.

1. Start a new pay run (Create menu > Pay run).

2. Set the Pay cycle to Unscheduled.

3. Ensure the Date of payment is in the payroll year you're sending the update event for.

4. Select only the employees you want to send an update event for.

5. Because you set the pay cycle to Unscheduled, you'll notice all hours and amounts are removed from each employee's pay (which is just what we want). Here's an example.

   

6. Complete the pay run as you normally do and declare it to the ATO.

Once the pay run has been accepted by the ATO, run the above reports again to confirm the totals match.

After the move, you'll notice these changes:

• You'll see a label in the STP reporting centre showing you're reporting on STP Phase 2.

  

  
  

• When terminating an employee in the STP reporting centre, you'll choose a Termination reason.

  

• There's a new Send update event button in the STP reporting centre to send your employees' latest year-to-date payroll totals to the ATO. Previously you could only do this by recording a zero dollar ($0) pay.

  

When you move from STP Phase 1 to STP Phase 2, the following details are checked in MYOB to make sure they meet the new STP requirements.