This yr, the way in which you handle Single Contact Payroll (STP) will begin to look a bit completely different as we transition to STP Part 2. It will increase how employers report particulars about their employees and their pay to the ATO. With a compliance deadline for Xero prospects set for the top of this yr, we’ve been busy working to prepare for the transition in Xero Payroll.
The adjustments can be rolled out in three levels all year long, with the primary stage beginning later this month by way of an opt-in restricted launch. So what’s coming and how will you prepare? Let’s take a deeper look.
Remind me, how are the STP Part 2 adjustments being put in place this yr?
The adjustments are being rolled out in levels to offer you extra time to regulate and get conversant in STP Part 2. Right here’s when you possibly can anticipate to see them go reside and what can be concerned:
- Stage one: The primary stage will begin turning into out there inside Xero from later this month (April) onwards by way of a restricted launch earlier than being rolled out over the next months. It will embody updates to the way in which new worker information are arrange in payroll.
- Stage two: The second stage will start rolling out inside Xero within the new monetary yr. It will prolong the arrange course of to allow the transition of current worker payroll information to STP Part 2 compliance.
- Stage three: The ultimate stage can be out there within the second half of this yr. It’s going to see the brand new pay objects and go away from STP Part 2 finalised inside Xero, with product help to evaluate current pay objects and go away that will have to be modified to these stipulated by STP Part 2.
Will this modification how I report back to the ATO proper now?
Not but – it’s necessary to notice that every one Xero payroll prospects will proceed to report STP Part 1 in the meanwhile. The rollout of STP Part 2 pay objects and updates to the worker setup course of in Xero Payroll won’t have an effect on reporting or any YTD values despatched to the ATO.
Xero Payroll will proceed to report pay as gross till prospects have accomplished the total transition later this yr. There aren’t any impacts or adjustments to the STP finalisation course of in July 2022. In the meantime, many of those new pay objects are already out there in Xero Payroll, so you will get conversant in them earlier than the compliance date.
Don’t fear – we’ll be offering help by way of every of the transition levels (each inside your Xero account and thru instructional assets). Should you run a small enterprise, your advisor will be capable of present help at the moment.
What adjustments are coming as a part of stage one? And what does it imply for the way I add new workers?
With stage one, the way in which you add new workers into Xero can be a bit completely different. To be STP Part 2 compliant, each new worker arrange in payroll might want to have extra element on the elements that make up their pay. These embody:
Employment sort – whether or not the person is an worker or contractor.
Revenue sort – components of how the person is paid. These embody:
- Wage and wages (this tends to be most workers, relying on what you are promoting)
- Carefully held payee
- Working vacation maker
- Non-employee (contractor)
- Labour rent (contractor from a labour rent company)
Employment foundation – whether or not the person is full-time, part-time or informal.
Tax scale – you have to to appoint the suitable PAYG tax scale class that determines how a lot tax ought to be withheld for an worker. These tax scales embody:
- Common
- Actors, selection artists and different entertainers*
- Horticulturalists and shearers*
- Seniors and pensioners
- Working Vacation Maker
*Withholding tax for seniors and pensioners, actors, selection artists and different entertainers, in addition to horticulturalists and shearers will have to be calculated manually (as is the present course of). Xero doesn’t presently help the distinctive withholding tax guidelines for these tax scales.
On this video, we present you methods to add an worker with the brand new Single Contact Payroll Part 2 worker arrange:
You talked about intently held payees – what are these once more?
Good query. Carefully held payees (in any other case referred to as a intently held worker) are people instantly associated to the entity from which they obtain funds. For instance, this would come with family in a household enterprise or beneficiaries of a belief fund.
Final yr, STP pointers had been up to date so that every one companies should embody intently held payees salaries or wages by way of STP – irrespective of how occasionally they’re included in a pay run.
With STP Part 2, you’ll have to point whether or not an worker is intently held or one of many different earnings varieties. Which means in the event you’ve simply employed your youngster or different relative, like a nephew, for a part-time job, you’ll have to pick them as intently held when setting them up in Xero as soon as stage one kicks in.
What’s a restricted launch and the way do I choose in?
STP Part 2 is necessary and we need to get it proper. Which is why we’re beginning with a restricted launch for stage one and permitting time to check and refine the payroll expertise. This implies a restricted variety of Xero prospects will be capable of join and use the brand new STP Part 2 worker setup course of earlier than we roll it out extra broadly. Why? All in order that we are able to make the complete expertise higher for everybody concerned.
That is an opt-in course of – that means you must signal as much as entry it. Head to the worker part of our STP Part 2 Info hub and comply with the directions and it’ll let you recognize in the event you’re eligible.
How will I do know after I’ll be capable of use the STP Part 2 new worker arrange?
Should you meet the standards, you possibly can register and your account will swap over within the following weeks. For everybody else, we’ll begin to transfer you throughout over the following few months. This course of will occur step by step and also you’ll comprehend it’s time when the brand new fields can be found in your worker arrange course of.
Will there be a deadline for opting in?
No, you possibly can register at any time, up till the broader launch of stage one.
What if I’m not planning on including a brand new worker any time quickly although?
No want to fret – in the event you’re not including any new workers, you won’t even discover the change. It’s helpful to pay attention to this up to date course of, nonetheless, for while you do have somebody new becoming a member of the workforce.
I’m confused about including contractors into my payroll. What ought to I be doing?
There are just a few alternative ways to handle contractors in Xero. First, a fast refresher on what counts as a contractor. They run their very own enterprise and promote their time and ability as a service to others, in contrast to workers who work inside a enterprise.
Contractors – typically known as impartial contractors, sub-contractors or subbies – usually use their very own processes, instruments and strategies to finish the work. They normally negotiate their very own charges and dealing preparations, and might work for multiple shopper at a time.
Inside Xero, contractors will be arrange as a payee at your discretion. For instance, you would possibly do that in the event that they submit timesheets or are entitled to be paid superannuation. In the event that they’re arrange as a payee in Xero Payroll, you’ll must comply with the brand new STP Part 2 course of.
For extra info on how contractors are outlined, go to the Fairwork web site. Should you’re after recommendation particular to what you are promoting, please attain out to your advisor.
What STP Part 2 updates are already out there in Xero?
Most of the pay objects from STP Part 2 are already reside and able to go in Xero, like bonuses and commissions, new allowance varieties and quite a lot of lump sum funds. Whilst you don’t want to make use of these simply but, they’re out there in the event you’d prefer to get a head begin in your STP Part 2 compliance.
For the total particulars, go to the STP Part 2 Info Hub by way of the Single Contact Payroll part of your Xero account. We’ll proceed to share the standing of latest features as they’re added.
The place can I discover extra info on STP Part 2?
We’ve acquired you lined. You possibly can check out the Xero information to STP Part 2 and this useful guidelines. You too can go to Xero Central, or consult with the ATO’s employer reporting pointers.
Hold a watch out for extra updates from us – we’ll let you recognize what’s altering at each step of the way in which. And, after all, don’t hesitate to ask you probably have any questions – we’re at all times right here to assist.
