Modifications are coming about the way you handle payroll with Single Contact Payroll (STP) Section 2. We’ve been busy working within the background to get Xero Payroll up to date and prepared that can assist you transition forward of our compliance date later this 12 months. So if you happen to’re questioning whenever you’ll have to make modifications (or have observed some updates in Xero already), right here’s the most recent on our STP Section 2 rollout. As at all times, we’ll proceed to ensure you have all the data and instruments it’s good to information you thru this course of.
Remind me – what’s STP Section 2 once more?
Most Australian employers are accustomed to Single Contact Payroll. STP Section 2 is the subsequent cease on this journey. The place part one was a manner of reporting staff’ tax and tremendous to the ATO, STP Section 2 expands this system to seize extra detailed data. This can cut back the compliance burden for employers and people, and assist the admin aspect of issues for Providers Australia.
Though it’s good to present the ATO with extra data, the best way you submit STP stories gained’t change; how a lot it differs out of your present course of will depend upon the nuances of your distinctive enterprise and staff.
When will the modifications be rolled out in Xero?
We now have secured a deferral for all Xero Payroll customers till 31 December 2022, and we’re working intently with the ATO to rollout the Section 2 modifications. That will help you alter to the shift and guarantee a easy transition inside Xero forward of the compliance date, we’ll be rolling these out in three levels over the 12 months.
When will every stage start?
Stage one: The primary stage will begin being accessible inside Xero from mid-April onwards. This can embody updates to the best way new worker information are arrange in payroll, guaranteeing STP Section 2 compliance.
Stage two: The second stage will start rolling out inside Xero mid-year. This can lengthen the arrange course of to allow the transition of current worker payroll information to STP Section 2 compliance. This can present ample time so that you can guarantee all staff in your corporation are appropriately arrange for STP2 Section 2 compliance.
Stage three: The ultimate stage can be accessible within the second half of this 12 months. It would see the brand new pay objects from STP 2 finalised in Xero, with product help to overview current pay objects which will have to be modified to these stipulated by STP Section 2.
In the meantime, many of those new pay objects are already accessible in Xero Payroll and can proceed to be launched over the approaching months so you can begin to make use of them forward of the compliance date.
We’ll proceed to let as these progress and ensure you have the data it’s good to transition as seamlessly as doable. This can embody help in Xero, schooling webinars and guides that can assist you alter to every stage.
What updates have you ever already made?
You’ll have seen some new additions inside Xero already as we’ve been busy engaged on objects that can assist you turn into STP Section 2 compliant. Whereas these should not necessary but, they’re accessible now so that you can begin preparing forward of the transition.
This consists of new fee varieties that assist seize the extra detailed payroll data wanted for STP Section 2. These are:
- Bonuses and commissions: Beforehand they have been reported as a part of gross funds, however for STP Section 2 can be reported individually.
- Lump sum W (return to work) funds: A return to work quantity is paid to induce an worker to renew work – beforehand this was reported as a gross sum.
- Lump sum E funds: That is used whenever you make lump sum funds for again pay from prior earnings years and is now accomplished through STP as an alternative of a letter.
- Director’s charges: In case you pay administrators’ charges, you have to individually embody these in your STP Section 2 report.
- New allowance varieties: Beneath STP Section 2 reporting, allowances for process, instruments or qualification have to be reported underneath new labels.
In the case of inputting worker data, you at the moment are additionally ready so as to add a termination purpose when one in every of your crew wraps up with the enterprise. This removes the necessity for an employment separation certificates to be issued.
Extra particulars on these modifications can be found within the STP Section 2 Data Hub through the Single Contact Payroll part of your Xero account, and we’ll proceed to share the standing of recent capabilities as they’re added.
What can be included in stage one of many rollout?
The primary stage of STP Section 2 updates can be going reside in Xero from round April, with some tweaks to the way you onboard new staff. The Employment and Taxes tab in payroll worker setup can have a makeover and embody some new fields that can assist you on the journey to STP Section 2 compliance.
In the case of including employment particulars, from April you’ll want to pick out whether or not a brand new crew member is an worker or contractor. You’ll additionally want to decide on their earnings kind, comparable to wage and wages, intently held payees (??together with members of the family of a household enterprise, administrators of an organization and shareholders or beneficiaries,) seasonal employees or working vacation makers, and add their employment foundation (full-time, part-time or informal).
For contractors, there’ll be the necessity to choose their earnings kind too – both:
- Non-employee, an impartial contractor, or;
- Labour rent, outsourced labour from a hiring company
In the case of tax setup, there are some things that can look slightly totally different. Tax scale is a brand new STP Section 2 requirement and you’ll have to choose between:
- Common
- Seniors & pensioners
That is to assist handle how a lot tax is withheld for PAYG. This can all be detailed in Xero because it goes reside, to obviously information you thru the modifications.
Is there anything on the best way?
Sure – there are extra additions coming quickly that can seem in Xero over the subsequent few months. These embody cashed out depart and higher outlined paid depart objects, so that you’ll have loads of time to get accustomed to them earlier than the compliance deadline. We’ll replace the STP Section 2 web page in Xero because the additions go reside and preserve you throughout on the best way to use them.
Do I have to do something proper now?
Simply take a while to get accustomed to the brand new pay objects and different additions which are accessible inside Xero now. We’ll proceed to let as modifications are rolled out and ensure you have every little thing it’s good to get STP Section 2 prepared.
How can I discover extra data?
On the lookout for extra particulars? In case you’d like to search out out extra about what STP Section 2 will seem like in Xero, we’ll be operating a collection of webinars in February and March to information you thru the method. You may also check out this helpful Xero information to STP Section 2, go to Xero Central, or discuss with the ATO’s employer reporting tips.
Preserve an eye fixed out for updates in Xero, in addition to the STP Section 2 Data Hub in Xero Payroll for the most recent on how new additions and the rollout are monitoring. We’ll ensure you’re throughout what’s occurring all through the transition.