STP Phase 2 - Update For Xero Users

Xero has been granted a deferral on the start date of the STP Phase 2 payroll software. The deferral applies to all new and existing customers.

This means that all customers reporting STP using Xero Payroll have until 31 March 2023 to report their first STP Phase 2 pay run, instead of the 1 January 2023 ATO deadline. 

This gives Xero Payroll customers more time to ensure that payroll records are STP Phase 2 compliant.

Xero's STP Phase 2 consists of four steps to transition, including:

Step 1. Update employee profiles (available to be completed now) - includes updating employment types, income types and tax scales for all employees.
Step 2. Replace pay items (coming soon) - replace your pay items with items that fit into the new STP2 categories.
Step 3. Assign leave categories (available later this year) - assign a predefined leave category to your paid leave items.
Step 4. Filing pay runs with Single Touch Payroll Phase 2. 

While there's nothing you need to do just yet, it's important to be aware of these new requirements. You'll be able to begin the transition ahead of the deferred compliance date so you have time to adapt. When this functionality is updated, Xero will be providing support – both within Xero and through educational resources – to help you transition employee records to STP Phase 2.

FMA Partners will continue to keep you updated on any changes that need to be made so that you're ready to make the transition. Should you require assistance with the transition, please do not hesitate to contact our office.