Content reviewed and verified by Graham Chee, with 25+ years in accounting, taxation, investment management, governance, risk & compliance.
Understanding STP Phase 2
Single Touch Payroll (STP) Phase 2 represents a significant evolution in payroll reporting for Australian businesses. Introduced by the ATO, Phase 2 expands reporting requirements to include additional information about employee payments, tax withholding, and superannuation. This comprehensive guide helps you understand your obligations and implement compliant processes.
Key STP Phase 2 Requirements
STP Phase 2 Implementation Steps
Common STP Phase 2 Questions
Q.When is STP Phase 2 mandatory?
STP Phase 2 became mandatory for substantial employers (20+ employees) from January 1, 2022, and for all other STP reporters from January 1, 2023. However, the ATO has provided transitional arrangements for businesses needing more time.
Q.What happens if I miss the deadline?
The ATO has been taking a supportive approach during the transition period. However, ongoing non-compliance may result in penalties. Contact the ATO early if you anticipate difficulties meeting requirements.
Q.Do I need new payroll software?
Most modern payroll software has been updated for Phase 2. Check with your provider to ensure your version supports all Phase 2 requirements. Some older systems may require upgrades or replacement.
Q.How do I classify employment basis correctly?
Employment basis must reflect the actual employment arrangement: full-time (regular hours), part-time (regular but fewer hours), casual (irregular hours, casual loading), or labour hire. Misclassification can lead to compliance issues.
Q.What are disaggregated PAYG amounts?
Phase 2 requires separate reporting of tax withheld for different payment types (salary/wages, allowances, bonuses, etc.) rather than a single total. This provides the ATO with more detailed information.
About the Author
Graham Chee, FCPA, GRCP, GRCA, IAIP, IRMP, ICEP, IAAP
Principal Advisor & Founder
Graham Chee is a highly qualified business advisor with over 25 years of professional experience spanning accounting, taxation, investment management, governance, risk, and compliance. As a Fellow of CPA Australia (FCPA), Graham brings deep technical expertise combined with practical business acumen. His qualifications include Governance Risk and Compliance Professional (GRCP), Governance Risk and Compliance Auditor (GRCA), Integrated Artificial Intelligence Professional (IAIP), Integrated Risk Management Professional (IRMP), Integrated Compliance and Ethics Professional (ICEP), and Integrated Audit and Assurance Professional (IAAP). Graham has advised hundreds of Australian SMEs on strategic planning, succession, business valuation, and compliance matters, helping business owners build sustainable, valuable enterprises.
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