STP Phase 2 explained¶

Single Touch Payroll (STP) started as Phase 1. The report told the ATO the total pay, tax and super for each employee. Phase 2 — the 2020 pay event service — asks for more detail in the same report.

The extra detail lets the ATO and other agencies get what they need straight from your payroll. That means some older, separate reports are no longer needed.

In one line

STP Phase 2 keeps the same "report each pay" idea but asks for more detail, so it can replace older reports like payment summaries and TFN declarations.

Why this matters¶

Phase 2 changes what is inside each pay report, not how often you report. Knowing what the new fields mean helps you understand why your pay items, income type and tax details all need to be set up correctly.

What you will learn¶

The main changes from STP Phase 1 to Phase 2
What disaggregation of gross, income types and tax treatment codes mean
Which older reports Phase 2 can replace

Understanding the concept¶

The ATO lists the key changes in the 2020 (Phase 2) service. The main ones are:

Disaggregation of gross. Before, most pay was reported as one gross figure. Now pay is split into separately itemised payment types — such as overtime, bonuses, allowances and paid leave — each with a common meaning.
Income types (and country codes). All pay must be reported by an income type, which describes the kind of income. Some income types must also carry a country code for foreign income.
Tax treatment codes. A new field in every pay event shows which tax scales and other settings you used to work out the tax withheld from the employee.
TFN declaration details. The employee's current employment and tax details are now in every pay event, so you no longer send a separate TFN declaration to the ATO.
Employment separation (cessation) reasons. Reporting why employment ended can remove the need for separate separation certificates.
Child support (optional). You may choose to include child support deductions and garnishees in the report instead of sending separate advice to the Child Support Registrar.
Closing the payment summary. When you finalise your STP reporting for the year, you are relieved of the obligation to give payment summaries to employees and a payment summary annual report to the ATO for those amounts.

For accountants & bookkeepers

The ATO describes disaggregation of gross as reporting remuneration as separately itemised payment types with a common definition, rather than a specific definition per income type. Tax treatment codes are a mandatory field indicating the PAYGW tax scales and other components applied. Child support garnishees and deductions are optional in the pay event. Finalising the STP report relieves the payer of payment summary and payment summary annual report obligations for the amounts reported and finalised. "STP Phase 2" is the ATO's name for this expanded reporting; in the software developer material it is the 2020 pay event service.

Example¶

Under Phase 1, Ravi's payslip pay was reported to the ATO as one gross amount. Under Phase 2, the same pay is split: ordinary earnings, an overtime amount, and a travel allowance are each reported as their own payment type. Ravi's pay also carries an income type and a tax treatment code. Because Ravi's tax details are now in every pay event, his employer no longer sends a separate TFN declaration.

Common mistakes¶

Thinking Phase 2 changes how often you report — it changes the detail, not the timing.
Treating all pay as one gross figure — Phase 2 needs it split into payment types.
Forgetting that child support reporting through STP is optional, not required.

How this works in myaccountant¶

In the app — your pay items map to STP payment types automatically, managed under Pay items. Each employee's income type is set on their tax and employment details, and the tax treatment code is worked out automatically from the answers on their tax declaration — you pick options; you never type the code.

Key points¶

Phase 2 (the 2020 pay event) adds more detail to each pay report.
Gross pay is disaggregated into separately itemised payment types.
Every pay event carries an income type and a tax treatment code.
Employment and tax details are in every pay event, replacing the TFN declaration.
Child support reporting through STP is optional.
Finalising STP can relieve you of payment summary obligations.

Learn next¶

General information only — not tax, super or financial advice.

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