Single Touch Payroll (STP) reporting has been expanded, with employers required to report more information to the ATO when they process payroll. This is known as 'STP Phase 2'.
The purpose of STP Phase 2 is twofold; 1) it enables the ATO to capture more information about payments to employees and 2) assists with the admin side of things for Services Australia.
When these changes come into effect will depend on your software provider - many have been granted deferrals to update their products.
(Xero has secured a deferral for STP Phase 2 reporting until 31 December 2022. MYOB have secured a deferral until 1 January 2023.)
In the meantime, employers should still be getting prepared for STP Phase 2. There may be changes that you need to make to your payroll pay codes/categories so that they align with Phase 2 requirements.
There are also changes to the reporting of allowances that are paid to employees, salary sacrifice reporting and the introduction of 'income types'.
The ATO Employer STP Phase 2 Checklist available on this ATO webpage may be helpful for employers.
Any payments to 'closely held payees' will also be required to be reported through STP. A closely held payee is an individual who is directly related to the employing entity (i.e. family members of a family business, directors/shareholders of a company and beneficiaries of a trust).
For more information, here is Xero's guide to STP Phase 2. And here is MYOB's guide.