Some changes are as good as a rest. Others can feel like a banging headache. Let’s face it, grappling with a new chapter of Australia’s Single Touch Payroll (STP) system is unlikely to feel like a relaxing head massage. It is, however, important.
Cue fanfare! From January 2022, the government’s rolling out STP Phase 2. We’re here to help you get to grips with the key points.
STP is the way you, as an employer, should be reporting your nanny's tax and super info to the Australian Taxation Office (ATO). Read on for the lowdown on how STP Phase 2 will affect you.
The ATO’s been clear that, although the deadline for STP Phase 2 compliance is January 1, 2022, it will be taking a pragmatic approach to the change. That’s not a green light to ignore and delay but it means that if you “show willing” you’re less likely to be in trouble if you make a slip-up.
The ATO is also keen to flag up the benefits of the changes to both you and your nanny. Here are some that may apply to you as the employer of a nanny:
Here are some of the potential benefits of STP Phase 2 for your nanny:
Even though you’ll need to supply additional information in your STP report, many things will stay the same. These include things like:
Some other tasks will become easier and simpler.
Currently, your STP report will include a gross amount. This is the total of what can be a variety of components and payment types. Some of these get different treatment for social security purposes. As a result, you will in the future need to report more detail.
There are lots of dependencies connected to helping you figure out the right amount to withhold from your nanny’s wages. These may relate to the info they supply in their TFN or withholding declaration or their employment information.
In STP Phase 2 you will have to report this information in each STP report, reflecting any changes, if any, to your nanny’s employment basis.
You must always report your nanny’s commencement date. You should also supply information about your nanny’s employment basis according to their work type. Here are some of the key examples:
You will already be informing the ATO about the type of income your nanny receives in your STP report. In Phase 2 the info you provide will also do the following:
Your STP Phase 2 report is going to include a 6 character tax treatment code for your nanny. The tax treatment code informs the ATO about certain factors. These are things that can influence the amount you withhold from payments to your nanny.
Submitting this information through your STP report has a key advantage. It means that when your nanny gives you a TFN declaration you no longer need to send a copy to the ATO.
Your STP software programme will automate the reporting of the applicable code and ensure that it’s valid. It is important that you’re across what the code stands for.
Your DSP will be updating their STP-enabled software. This will then allow them to offer Phase 2 reporting. When it’s all ready to go, your DSP will inform you about what you need to do.
There are some things you can do now to get yourself ready. This might include reassessing whether it’s the right moment to review how you manage your nanny payroll. If you do it yourself, it might be time to hand it over to a payroll provider.
If you’re a busy parent, it’s highly likely that you may feel you have more pressing things to worry about than complying with STP Phase 2. If so, there is a solution. That lies with using a payroll provider like Pay the Nanny Australia.
We take pride in keeping on top of all the ins and outs that come with paying your nanny. If you’re at all unsure about what you need to do to be compliant with the STP Phase 2 rollout, talk to us and we’ll sort it all for you.
Get in touch with Pay the Nanny now for all your nanny payroll needs.