This blog was updated on 6 April 2023. Employment Hero Payroll handles STP Phase 2 reporting for you with ease, and is ATO certified. Learn more here.
In 2019, it became mandatory for all Australian businesses to begin STP reporting. As a result, payroll systems had to build an STP reporting component into their software; or risk falling behind and losing customers to more advanced software. Since the initial roll-out, the Government announced that STP would be expanded (STP Phase 2) to include additional information and reduce the reporting burden for employers and registered agents providing payroll services.
As of 1 January 2022, it became mandatory for STP Phase 2 reporting. Employment Hero Payroll is STP Phase 2 compliant. Learn more about transitioning STP records between payroll softwares by reading on.
What if a business is not using Employment Hero Payroll, but is thinking about changing over payroll software?
It can be a pretty frustrating task migrating to a new payroll system. Most businesses make the decision to transfer at the start of the financial year to simplify the process as much as possible. Alternatively, when transferring to another payroll system during a financial year, businesses need to consider the following:
- Bringing across data for active employees only or employees terminated with the financial year also
- Bringing across YTD payroll figures or start anew
- How to transition STP
All the above questions are interrelated and basically determine the response to the last question.
There are several ways to transition STP reporting from one payroll system to another. All transitional options relating to STP, when migrating over to Employment Hero Payroll during a financial year, can be found here. I’m sure you’re asking: what’s the ‘cleanest’ option? Which one will minimise any impact on existing records reported to the ATO? We’re happy to tell you…
Transitioning STP records to Employment Hero Payroll using an existing BMS ID
The prerequisite of using this option is that the business brings across their employee YTD payroll data to Employment Hero Payroll. Why would businesses bother doing this? Firstly, it allows for consolidated financial year reporting – if YTD data was not brought across, the business would have to generate reports from the previous and current payroll system and then merge the reports together. Secondly, it allows employees to see correct YTD data on their pay slips.
So, if the decision has been made that importing YTD payroll data is the best way to go, the process of using the previous BMS ID to report STP going forward in Employment Hero Payroll is as follows:
- Change the BMS ID in Employment Hero Payroll to that of the previous payroll system’s BMS ID;
- Copy over the employees’ payroll ID used in the previous payroll system to the STP Payroll ID field in Employment Hero Payroll. This is done easily using our employee import/export feature;
- Import YTD figures into this payroll system using the opening balances feature;
- Lodge an update event to report the YTD totals imported or alternatively wait to lodge the first pay event as this will include the imported YTD totals for the employees within that pay run.
Detailed instructions on how this process works can be found here.
What are the benefits of transitioning STP records using an existing BMS ID?
There are quite a few. They are:
- There will be only one record showing in the employee’s myGov account. Although a second record is not the end of the world, it’ll minimise any employee confusion or concern about why there is a second record to begin with.
- Not having to worry about creating a $0 event in the previous payroll system. If a business migrates to Employment Hero Payroll and brings across the YTD payroll data, any STP events reported in the previous payroll system must be wiped out in order to not over report employee payroll data. This would require lodging an event in the previous payroll system that reverses all YTD data already reported to the ATO.
- The finalisation process only needs to be done once. At the end of financial year, a finalisation event will only need to be created in Employment Hero Payroll (and not in the previous payroll system also) and reconciliation will be easy as all payroll data is stored in Employment Hero Payroll.
Looking to find out more about how Employment Hero prepared for STP Phase 2? Take a look at our support articles.
Disclaimer: The information in this article is current as at 6 April 2023, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.
