BAS Agent's Blog Archives

How to Apply for an STP 2 Deferral

BAS Agent's Blog, Payroll & Superannuation / By Louise McLoughlin / 16 March 2022 / ATO, Deferrals, payroll, STP, STP Phase 2 / 2 minutes of reading

As you probably know by now, STP Phase 2 has begun. It began on 1st January 2022, with a deferred hard start date by the ATO of 1st March 2022.

Your payroll software provider may have a deferral in place with the ATO for a later start date (see list below) which will cover you as their customer. However, some software providers are ready now and do not have a deferral in place. Examples of these are Quickbooks Online (KeyPay) and Saasu. If you are using one of this software or something else, then your business should be ready for STP 2 and be reporting data to the ATO as per their requirements. (Note, to check if your software is STP 2 enabled, you can go to this ATO page and search for “Payroll Event 2020”. This will produce a list of software that is STP 2 – ready.)

If you know you are not ready and need more time, you can try to apply to the ATO for a deferral. You can do this via Online Services for Business. Simply log in and follow these steps:

1. Select Employees
2. Select STP deferrals and exemptions
3. Select Delayed transition to STP Phase 2 expansion
4. Complete the request
5. Click Submit.

You will also need to advise:
1. Which payroll software is being used;
2. The reason a delay is being sought, and
3. The expected date the business will be able to start reporting under STP 2.

Software Providers with a Current STP 2 Deferral
The following SPs have a current deferral in place with the ATO which also covers you, as their customer:

Xero – up to 31/12/22
MYOB – up to 01/01/23
Reckon – up to 01/01/23

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$450 Super Guarantee Threshold Scrapped!

BAS Agent's Blog, Payroll & Superannuation / By Louise McLoughlin / 27 February 2022 / Super, Super Threshold, Superannuation Guarantee / 2 minutes of reading

As part of the Government’s Treasury Laws Amendment Bill 2021 which passed on 12th February 2022, it has been decided that the $450 superannuation guarantee threshold will be removed. This will begin on July 1, 2022.

The scrapping of the threshold will make about 300,000 more workers eligible for super contributions, including many low-income employees in part-time and casual positions. This will ensure all workers can build their retirement savings, not just those in higher-paid, full-time positions.

Currently, employees must gross a minimum of $450 per month with one employer in order to be paid super on top of those wages (note, this can be $350 per month for those working in the hospitality industry e.g. award MA000009 Hospitality Industry). Those who work casually or part-time may find that they never quite reach that threshold even if they hold several jobs at once. For example, an employee who has 3 casual jobs, earning $300 per job per month, will not receive super on any of those wages due to the $450 threshold. This hardly seems fair and is the main driver for the removal of the threshold.

So, from July 1, 2022, if you employ staff, you will need to pay super contributions on all their earnings, no matter how little each month. For example, if your employee grosses $100 for the month, then super of $10 (currently paid at 10%) will accrue and be paid to the employee’s super fund.

While the move to remove the super threshold is pleasing in my opinion, it is worth noting that employers’ payroll budgets will increase as a result. The cost to employ staff is currently very high and this change will only serve to make it higher! Add in the next super guarantee increase to 10.5%, also from 1 July 2022, and I think we shall see some employers squirming!

While your payroll software will more than likely be upgraded to take up the removal of the super threshold, it is worth noting the start date to ensure you can check your payroll setup is correct when the time comes.

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Unpaid Pandemic Leave

BAS Agent's Blog, COVID-19, Payroll & Superannuation / By Louise McLoughlin / 22 February 2022 / COVID-19, pandemic leave, payroll / 2 minutes of reading

As per Fair Work, some employees will be entitled to unpaid pandemic leave from 31 December 2021 to 30 June 2022. This affects 74 awards – see this list to check if your workplace is affected.

But what is unpaid pandemic leave and how should it be used?

What is unpaid pandemic leave?

If an employee is prevented from working because he has to self-isolate as directed by:

government or medical authorities or his doctor, or by
enforceable government directions placing restrictions on non-essential businesses,

he will be eligible for up to 2 weeks’ unpaid pandemic leave.

What do I need to know about unpaid pandemic leave?

Full-time, part-time and casual staff are eligible.
Paid leave does not have to be used before pandemic leave is taken.
All staff can take the 2 whole 2 weeks leave - it is not pro-rated for staff who do not work full-time.
Unpaid pandemic leave does not affect other types of leave, paid or unpaid.

My employee wants to take unpaid pandemic leave. What should I do?

Your employee needs to advise you when they will take the leave (even if it’s already started) and the reason they are taking it. He should do this via email so that you both have written evidence as to when the leave was taken. The employee should indicate how long he will be absent from work. You can ask your employee to provide evidence that shows why they took the leave, such as a medical certificate. Note, if your employee is actually ill from Covid-19, then he/she may benefit from taking paid personal leave instead. In this case, you could ask for other evidence such as a positive PCR or a Rapid Antigen Test reading.

Go to this Fair Work page for further information.

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Transitioning to STP Phase 2 – Planning Ahead

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By Louise McLoughlin / 22 January 2022 / ATO, payroll, Single Touch Payroll, STP, STP Phase 2 / 3 minutes of reading

This is the final blog in a four-part blog series about STP Phase 2. In part one of this blog series, we looked at the benefits of phase 2, then, in part two, we outlined which software providers are ready for STP 2 now. Part three in the series delved deeper into the technical side of STP Phase 2. This final blog will focus on the sorts of things employers or their bookkeepers can do now, in order to plan ahead for a smooth transition to STP Phase 2.

STP Phase 2 will require employers and/or bookkeepers to firstly understand how it will change payroll, and secondly, the specific changes they need to make to their own payroll. It can be overwhelming and confusing, to say the least! The main thing to remember is that your payroll provider will do most of the heavy lifting in terms of creating the infrastructure needed to facilitate STP 2. Your job is to understand the terminology and how the new reporting requirements apply to your payroll setup and your employees/payees. This may take some time, and thankfully, time is on your side, given the ATO has provided a blanket deferral until 1st March 2022. Also, several payroll providers have attained a much longer deferral which also covers their customers.

The best thing you can do is to start to review your current payroll setup. Check employees’ details both personal and payroll-related. I have created a spreadsheet you can use to review your current employees/payees which you can download and use as needed (see below). This spreadsheet will collate most of the information you will need in order to transition to STP 2. Start the process by completing the spreadsheet and then, when you are ready to transition, you will have most of the required information at your fingertips.

Employee Review Worksheet for STP Phase 2

1 file(s) 4.00 KB

Download

Next, sit down with your employees/payees and explain what will happen once STP 2 begins. Tell them about how their information will be shared with the ATO and Services Australia. Explain that their payslips and income statements will look different and why. You may need to ask payees for more personal information during the setup of STP 2 – try to get ahead of the game and find out what sorts of data you don’t have and work with your payees to obtain it.

Keep an eye on your payroll provider’s pathway to STP 2. Your provider will advise you when you can transition and how it is to be done within the software itself. This may not happen for some months, but you can still prepare as per my above tips!

Lastly, think about when you would like to transition to STP 2. Yes, there are time constraints as per the ATO but they do say you can move over at any time during the year (provided you are covered by a deferral). However, you may like to put a plan in place and decide on a cutover date. That way, you can work towards the move to STP 2 in a timely manner and in a fashion that works for you and your business.

Lastly, to help you with your STP 2 plan and research, the ATO has created a set of guidelines for employers (see below). Download it and pop it away for use when you are ready to transition (or start your research now). Remember, don’t panic! There’s plenty of time and there will be a lot of help available to you when the time comes to tackle STP Phase 2!

ATO Guidelines for STP Phase 2

1 file(s) 4.00 KB

Download

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STP Phase 2 – Getting down and dirty

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By Louise McLoughlin / 22 January 2022 / ATO, payroll, Single Touch Payroll, STP, STP Phase 2 / 4 minutes of reading

This is the third blog in a series about STP Phase 2. The first blog looked at the benefits of STP Phase 2 and the second one outlined which software providers are ready for the changes now. In this blog, we’ll get down and dirty and cover the detail behind STP Phase 2:

What is it?
When does it start?
What is changing?
How payroll is changing and what it will look like - getting technical!

What is STP Phase 2?

Basically, STP Phase 2 is the same as STP Phase 1 except that more payroll data now needs to be reported. STP 2 requires drilling down into the details about your payees, their payments, PAYG withheld, and superannuation. These extra details will be shared with the ATO and Services Australia, providing them with greater visibility about your payees and you, as an employer.

When does STP Phase start?

The start date is 1st January 2022, however, the ATO has issued a blanket deferral to all employers who may not be ready (or their software provider isn’t ready) to the 1st March 2022. See our second blog in this series to see if your software provider has a deferral in place that extends your start date beyond 1st March 2022.

What is changing?

While the overall process of transferring your payroll data to the ATO via STP is not changing, there are some specific attributes of the process that will change. These are listed below:

Reporting of income types and country codes - see graphic below.
Disaggregation of gross income - you will be required to report more detail about income including gross, allowances, paid leave, overtime, bonuses and commissions, directors' fees and salary sacrifice.
New fields to replace Tax File Number Declaration services - while you will still need to retain a copy of the employee's TFND, you will no longer be required to send a copy to the ATO as data relating to the TFND will be transmitted at each and every pay event.
Lump Sum E by financial year - If you need to make a Lump Sum E payment (back payments more than 12 months old), you won't need to provide a Lump Sum E letter to your employee as it will be included in the STP report.
Adding new cessation type reason - because the date and reason for employment cessation will be in the STP report, you will no longer need to complete and provide separation certificates to employees.
New Child Support Agency deduction and garnishee – Child Support deductions and/or garnishees will be reported via STP reducing the need for you to send separate remittance advice to the Child Support Registrar.
Transferring payee year-to-date amounts – if you change software type or an employee's payroll ID number, this will be reported via the STP report. This will help avoid duplicate income statements appearing in employees' myGov accounts.
Separately reporting salary sacrifice - you will be required to report the pre-sacrificed income as well as the amount of salary sacrifice.

What will payroll look like under STP Phase 2?

As you can see from the list above, the types of data you will report via STP 2 will change. Specifically, there is more data required than that reported via STP Phase 1. In order to report this extra data, your payroll needs to be set up correctly. There will be new income types (see above) and new STP codes used by the ATO to read your data. The income types (both old and new) will need to be mapped to these new STP codes. Further to this, each employee setup will require some review/checking and new fields populated, including tax treatment codes and/or country codes (see below link). (Our next blog will provide you with a spreadsheet you can use to gather the information you will need for each of your employees before you set up STP Phase 2 in your software.)

Our main message to you is “do not panic”! Your software provider will assist you with the move to STP 2 when the time comes. In the meantime, we suggest that you do some research to assist you in better understanding how your payroll will be affected by STP Phase 2. To help you with this, we have created the below table. There are links to relevant ATO web pages which will provide specific information about how STP 2 relates to your employees, their payments, and tax withheld from those payments.

About your Payees	About Payments to Payees	About PAYG WH
Commencement Date	Income Stream Type	Tax Scale Category
Cessation Date	Payment Category	Tax Treatment Code
Cessation Reason	Payment Classification	Annual Tax Offset Amount
TFN or ABN (or both)	Deductions	Medicare Levy
Employment Basis	Child Support
Payroll ID	Allowances
Country Codes	Termination Payments
Income Stream	Superannuation

In our next blog in this series, we will tell you how you can get ready for STP 2 Phase 2, even if your software provider hasn’t begun to roll it out.

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Is your software provider ready for STP Phase 2 now?

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By Louise McLoughlin / 12 January 2022 / ATO, payroll, Single Touch Payroll, STP, STP Phase 2 / 2 minutes of reading

STP Phase 2 has started! It began on 1st January 2022 and if you are ready and your software is ready, you can begin to report your payroll via this next stage of STP now!

If you aren’t ready, don’t worry, the ATO has provided a blanket deferral to the 1st March 2022. This means that if your software is ready now, you have until 01/03/22 to ensure you are organised and have updated your payroll data to enable a smooth transition to STP Phase 2 reporting.

But how do you know if your software is ready? Most providers would have contacted you by now to explain their plans, but in case you missed their emails, here is a summary of the main providers and whether or not they are ready now:

Note – if your software provider has a deferral as per the above list, then you, as an employer, are covered by that deferral.

In our next blog in this series, we take a look at the technical side of STP Phase 2 and what it means for your payroll.

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STP Phase 2: what is it good for?

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By Louise McLoughlin / 5 January 2022 / payroll, Single Touch Payroll, STP, STP Phase 2 / 3 minutes of reading

Have you heard? STP (Single Touch Payroll) is expanding from Phase 1 to, you guessed it, Phase 2. For those who don’t know, STP is a technology that automates the transfer of payroll data from payroll software to government departments, mainly the ATO. STP Phase 2 will see payroll data also being shared with Services Australia, the first in a long list of government departments who will eventually get to see your payroll information (in my opinion). The expansion plan also means that employers will need to update their payroll systems in order to provide much more detail about their payroll at each payroll event (more about that in coming blogs).

This compliance change is happening for better or for worse, so my question is “STP Phase 2, what is it good for?” Absolutely nothing! No, only joking! It turns out that there are quite a few benefits for both employers and employees. This blog will outline those benefits.

Benefits for Employers

Tax File Number Declarations - although you will need to keep copies of your employees' TFN Declarations as part of your employee records, you will no longer need to send them to the ATO. This is because the information will be sent via each pay event through STP.
By nominating an "income type" for employees, you can tell the ATO if you're using concessional reporting for closely held payees or inbound assignees.
If you need to make a Lump Sum E payment (back payments more than 12 months old), you won't need to provide a Lump Sum E letter to your employee as it will be included in the STP report.
If you change software type or an employee's payroll ID number, this will be reported via the STP report. This will help avoid duplicate income statements appearing in employees' myGov accounts.
Data will be shared about some employees with Services Australia (SA). This means that information SA requires from you will be easier to provide e.g. payslips for prior periods.
Because the date and reason for employment cessation will be in the STP report, you will no longer need to complete and provide separation certificates to employees.
Child support deductions and/or garnishees will be reported via STP reducing the need for you to send separate remittance advice to the Child Support Registrar.

Benefits for Employees

Income statements will become more accurate because the ATO will have better visibility of the types of income an employee receives.
If an employee makes an error such as failing to report that he has a study loan debt (resulting in an unwanted tax bill), the ATO will be better placed to rectify the issue sooner rather than later.
If employees have dealings with Services Australia (SA), they will see a more streamlined approach to data capture evolve over time, including:

Prefilled details on claim forms and fewer requests for documentation;
Spending less time on the phone to SA to confirm details;
Receiving SMS or email advice when STP data shows their family income estimate may be too low, they have a new job or their employment details have changed in some way;
Ensuring that they are paid the correct amount from SA, and
Helping SA understand their financial situation if employees need to repay a debt to SA.

STP Phase 2 requires employers and bookkeepers to make major changes to payroll set up which in the interim, may seem onerous and pretty annoying. However, as can be seen above, there are many benefits for both employers and employees that will come from STP Phase 2 in the long run.

Of course, time will tell if these changes will run smoothly or have unwanted side effects. We will all have to wait and see how things play out. In the meantime, for those wanting further information about STP Phase 2, please visit the ATO STP Phase 2 resources page.

In our next blog in this series, we will review when the main software providers will be ready for STP Phase 2.

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Director ID

BAS Agent's Blog, Business Topics / By Louise McLoughlin / 18 October 2021 / 1 minute of reading

In an attempt to make it easier for external administrators and regulators to trace directors’ relationships with companies over time, the government now requires every company director to obtain a Director Identification Number or Director ID. This will also prevent fraudulent and unlawful behaviour when a company is wound up e.g. illegal phoenix activities. This will begin in November 2021.

The ID is a unique identifier that is applied for once and is owned by a director forever.

A director will need to apply for his own ID number himself – this cannot be done by someone else on his/her behalf. Application instructions can be found on the Australian Business Registry Services (ABRS) website.

Once the director ID is created, the director will need to share it with his/her company corporation record-holder. This may be the company secretary, another director, contact person, or an authorised agent of the company.

To find out further details about obtaining a director ID, go to the ABRS website.

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New Work Mindset

BAS Agent's Blog, Business Topics / By Louise McLoughlin / 24 September 2021 / Balance, change, Flexibility, Mindset, Work / 3 minutes of reading

personal growth, becoming, changing-2268884.jpg

Over the last few weeks, I have completely turned my beliefs about work, upside down and inside out.

I don’t know if it’s because I’m getting older and starting to eye-off retirement, or if it’s a side effect of living the “Covid-19 lifestyle”, but I’ve changed my mind about how a work-week should look. In short, I’ve decided that for me, the “normal” work-week no longer exists.

I have stopped believing that Monday to Friday are days for work and Saturday and Sunday are days for relaxing or play. For me, there are no longer weekdays and weekends – there are just days. Each day is mine to use as I please. Relaxing can happen on any day. Working can happen on any day. A day may involve both work and play – it’s my choice!

I no longer have set working days or hours – I work when I want to, for as long as I want to, on any day that suits me, including weekends.

I do not subscribe to the “Monday to Friday are for work and weekends are for relaxing”, concept.

How is this possible?

I am well aware that working whenever you choose, is not possible for many people, for various reasons. This is only possible for me because I am self-employed so I can call the shots. I am very lucky in that regard and am very grateful.

But I haven’t written this blog to spruik some sort of new philosophy or to convince you to try it too!

All of this, including this blog, is just for me, but I wanted to share it with you because I have found that this new mindset has made me more relaxed and more focused when I am working. I feel more in control of my work and life in general. I now have a work-life_life-work balance. Cool huh! And, hey, if you do want to give it a try, well that’s up to you, but again, this is really just something I’m doing for myself and my well-being.

How does this make me feel?

This new mindset has given me pure flexibility in my life. On any given day, if I feel like working, then I will work. If I want to take a walk, then I will walk. If I am asked to look after my grandchild, then I will happily do so.

I used to feel guilty if I tried to do something non-work-related during the week, always thinking, “I should be working right now”. Really, I was letting work control my life and my choices. Since enacting my new mindset, I no longer feel guilty. I feel like I’m in charge!

Giving myself permission to work whenever I want to or can, has somehow empowered me. And how do I feel about this? I feel happy and free. Yeah, that’s it. I feel free (even in lockdown!)

Have you made any drastic changes to the way you are working now? Has Covid-19 forced you to work differently compared to pre-Covid days? What are the pros and cons for you? I would love to read your comments – please do leave them below!

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How to check your transactions before lodging a BAS in Xero

BAS Agent's Blog, GST & BAS, Uncategorised, Xero / By Louise McLoughlin / 27 August 2021 / BAS, BAS Preparation, Xero / 2 minutes of reading

Although there are several ways to check your transactions before you lodge your BAS in Xero, one way to do it is by using the “Detailed Account Transaction Report”.

NOTE! THE DETAILED ACCOUNT TRANSACTION REPORT NO LONGER EXISTS IN XERO (SINCE JULY 2023). YOU NOW NEED TO ACCESS THE GENERAL LEDGER DETAIL REPORT TO MAKE THIS PROCESS WORK!

Here are our step-by-step instructions for using this report:

Log into your Xero file.
To get to the Detailed Account Transaction Report (DATR), go to the “Accounting” tab, then “Reports”, then “Accounting”, then DATR.
Select “wide view”

Enter the date range of your BAS.
Sort by account code.
Choose “cash basis” if your BAS is cash-based.

Select “update”. Note that you will now see 2 columns – one for GST rate and one for GST name.

Export the report to Excel.

Sort the column for GST name by A to Z. Here is a link for how to do this if you aren’t sure.
Review the transactions, making note of any errors or issues.
Go back to Xero and amend any transactions as required.
Save and/or publish the report with your other BAS reports for your records. You can now complete your BAS, satisfied that the data is accurate.
Add the DATR to your favourites list so you can find it easily when you do your next BAS.

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How to Apply for an STP 2 Deferral

$450 Super Guarantee Threshold Scrapped!