The Tax Office has agreed to push back the start date for the second phase of Single Touch Payroll after intense pressure from all corners of the profession.
A legislative instrument issued by the ATO on Wednesday has confirmed that mandatory STP phase 2 reporting will commence from 1 January 2022 — a six-month extension from the previously proposed 1 July 2021 start date.
STP phase 2 will require additional payroll information to be reported to the ATO, and subsequently shared with Services Australia and other government agencies.
The deferral comes after fierce backlash from the profession, with tax and accounting professional bodies, bookkeeping associations and software providers pushing back against the proposed 1 July start date.
The ATO was told that the deadline was unrealistic, given the impact of COVID-19 on the workload and priorities of tax practitioners, employers and digital service providers.
The Tax Institute’s senior advocate, Robyn Jacobson, said that while a 12-month deferral would have been preferable, the extension was a “sensible” outcome.
“Today’s announcement in the form of a legislative instrument issued by the ATO to defer the commencement to 1 January 2022 is very welcome,” Ms Jacobson told Accountants Daily.
“The deferral will help to ensure that data submitted through STP phase 2 to the ATO and subsequently shared with Services Australia is more likely to be accurate and able to be relied upon by the government.
“The start date of 1 January 2022 is softened by the fact that if businesses are not ready at the time, they can seek additional time depending on their circumstance, so it would be a case-by-case basis of the ATO allowing more time for individual businesses.”
The ATO notes that there is nothing practitioners and employers need to do at the moment, with work being done with accounting and payroll software providers to develop and test their services.
The profession also continues to wait for further public guidance on the rollout of STP reporting for closely held payees, after the ATO extended the exemption for such employers to 1 July 2021 in light of COVID-19.