If you’re a Xero user, chances are you’ve received warning signs about signing up for Single Touch Payroll (STP) Phase 2—before we dive in, we’d like to inform you that there’s no need to panic!
Why, might you ask? Well, it’s because the ATO has kindly worked with Xero in granting a deferred start date of 31 March 2023. Yep, that’s right—if you move across by this date, then you’re all good in the hood.
But wait, we have more! If you’d like to learn about our game plan for moving you across to STP2 and get the low-down about some additional resources, you’re in luck and we’re here to help you in today’s blog post… just continue reading!
We’re here to help you!
If you’re currently a loyal dance partner (client) of BBKC, you’ll be pleased to know that we have you on our list to action the following parts in Xero:
- Step 1: Update Employee Profiles including the employment type, income type and tax scale for each employee’s profile.
- Step 2: Replace Pay Items. Please mark the previous step as complete to enable this step.
- Step 3: Assign Leave categories. However, we won’t be able to action this one just yet as it’s coming soon!
- Step 4: Fill pay runs with STP Phase 2. You’ll continue reporting via STP for now until STP2 reporting is ready (this is also coming soon!).
At this stage, we’re able to follow through with Steps 1-2 as they’re currently available now. Once Steps 3-4 are in effect, you can rest assured that we’ll automatically action them just as we are for the first two steps!
What’s the process for updating Employee Profiles?
When moving across to STP Phase 2, you’ll need to provide more information on your employees and their pay including:
- Employment type: Is the individual an employee or a contractor to your business?
- Income type: How much is the individual paid? This includes items such as salary and wages.
- Employment basis: Is the individual working for your business on a full-time, part-time, or casual basis?
- Tax scale: How much tax should be withheld for the individual?
What’s the process for replacing Pay Items?
Once we (or you) have updated your Employee Profiles, it’s time to replace your Pay Items. As another requirement, you’ll need to report on the individual components that make up your employee’s pay – in short, you’ll no longer need to report on a single gross amount.
Going forward, you’ll be reporting on:
- Gross
- Bonuses and commissions
- Directors’ Fees
- Allowances
- Salary sacrifice
- Overtime
- Lump sum payments
- Paid leave
- Workers’ compensation
So, what’s next?
If you’re a current client with us, we’ll be in touch should we have any questions about either updating Employee Profiles or replacing Pay Items—we’ve already started this process prior to Christmas and will continue in the New Year. Once these steps are complete, we’ll send you confirmation via email.
New around here? If you’re looking for assistance in moving over to Single Touch Payroll Phase 1, please book a consultation with us here.