It is important to note that if you fail to transition by the 31st March 2023, your capacity to file STP might be impacted until you have finalised your STP 2 set up. It is strongly recommended that you talk to your advisor so that way you are fully aware of your transition status or informed about what steps you need to take so that you do fully transition before the end of March.
On top of this, if you fail to transition it is highly likely that you will receive some heavy scrutiny from the Australian Tax Office (ATO), you might also receive some form of financial penalty as well.
It is important to note that STP can be very difficult for some people to understand, and the larger your business is the more complex it is going to be. This means that it is important to get ahead of yourself and be as prepared as possible for the complexity of transitioning, it is therefore advised that you don’t leave to the last minute to make the transition.
Another thing to keep in mind is that, if your current payroll data fails to meet the new Phase 2 reporting requirements, you will be alerted by warning banners within pay runs or employee payslips. It is strongly recommended that customers take action as quickly as possible when addressing these warnings which can be done by making sure that your data is up to date and opting-in to STP Phase 2 as quickly as you possibly can. You need to make sure that the transition is made ahead of time.
It is important to note that if you fail to transition by the 31st March 2023, your capacity to file STP might be impacted until you have finalised your STP 2 set up. It is strongly recommended that you talk to your advisor so that way you are fully aware of your transition status or informed about what steps you need to take so that you do fully transition before the end of March.
On top of this, if you fail to transition it is highly likely that you will receive some heavy scrutiny from the Australian Tax Office (ATO), you might also receive some form of financial penalty as well.
It is important to note that STP can be very difficult for some people to understand, and the larger your business is the more complex it is going to be. This means that it is important to get ahead of yourself and be as prepared as possible for the complexity of transitioning, it is therefore advised that you don’t leave to the last minute to make the transition.
Another thing to keep in mind is that, if your current payroll data fails to meet the new Phase 2 reporting requirements, you will be alerted by warning banners within pay runs or employee payslips. It is strongly recommended that customers take action as quickly as possible when addressing these warnings which can be done by making sure that your data is up to date and opting-in to STP Phase 2 as quickly as you possibly can. You need to make sure that the transition is made ahead of time.
How To Complete Each Step of The Transition?
Step 1 – The first thing you need to do during the process of transition towards STP Phase 2 is to make sure that you transition your existing employee profiles so that they are STP Phase 2 compliant.
This includes providing new details such as; whether they are a contractor or an employee. This step will also include submitting additional information whenever you have to onboard employees who are new.
Step 2 – To complete step 2 of the process you will be required to update and identify certain pay items with the new earnings categories that are defined by the ATO for STP Phase 2 reporting. This is due to the fact that the gross amounts for each income type will now be required to report as a separate itemised amount, such as; allowances or over time and so on.
Step 3 – The third step in the process will help break down paid leave into a variety of different subcategories. It will give you a guided experience within the payroll so that way you will be able to easily update any existing paid leave types to comply with the new reporting requirements from the ATO. It is possible for you to find that some of the leave pay items have already been placed in the correct reporting category.
Step 4 – As soon as all of your payroll data has been updated and you have marked each step as complete within the STP2 Portal, you will be able to opt-in for the Phase 2 reporting. Xero is working within a partnership with the ATO, to help roll out the new software to customers during late January and early February. Furthermore, Payroll admins will receive a notification in their Xero account to tell them when they need to switch.
