You may have read information on STP Phase 2, and the ATO website mentions that this change will begin 1 January 2022.
Xero will change their software so that more detail of employees pays shows on your annual income statement (payment summary/group certificate), and will be reported each pay period. This should certainly help with tax returns, as currently we may see an allowance, but it doesn’t usually show what the allowance is for. STP Phase 2 also reports on salary sacrifice arrangements, and also streamlines Child Support Registrar reporting in the one payroll report, amidst other changes. As employers we don’t need to change what we’re doing right now if you currently process your payroll via STP; the ATO is currently liaising with the main software and payroll providers who will update their software to accommodate the changes.
Xero has advised that for its users, the ATO has granted a delayed start date for Single Touch Payroll Phase 2, until 1 January 2023, an extension of one year.
But if your non-Xero software does not have the same extension, now is the time to prepare for the change, as many of us will be on leave 1 January. Look out for the updates in your accounting software in the next 6-8 weeks and make sure your payroll staff know of the change coming up. Here is an ATO factsheet on STP Phase 2, and also a pdf of the confirmation of the deferred start date for Xero users.