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So the ATO knows how to treat each type of payment you're reporting through Single Touch Payroll, you need to assign an ATO reporting category to each of the earnings and deductions you use.

These categories are similar to the categories you assigned to earnings and deductions when doing payment summaries in previous years.

Which ATO reporting category should I assign?

As your business, award and employee agreement are unique, we can't specify what ATO reporting categories you should assign to your earnings and deductions.

However, you can use the descriptions of reporting categories below to guide you.

For additional information and advice:

What is each ATO reporting category for?

Use this information to work out which reporting categories you need to assign to your earnings and deductions.

Earnings and allowances

Earnings and allowances

 

New ATO reporting categoryDescriptionATO reference
Gross Payments

Include earnings you use for paying salary and wages. This includes pay items for:

  • holiday pay
  • sick pay
  • overtime
  • bonuses
  • commissions.

There are more pay items and some exceptions to these.

Do not include salary sacrifice payroll categories. Gross payments are reduced automatically when you assign pre-tax deductions and pre-tax superannuation categories such as salary sacrifice.

 

The rules of reporting through Single Touch Payroll - Gross Payments

Allowance - Car
Allowance - Transport
Allowance - Travel
Allowance - Meals
Allowance - Laundry
Allowance - Other

This includes payments you made to cover your employees’ work-related expenses, like tools or phone. For allowances that don’t sit into any of the main categories, assign them to Allowances – Other.

Typically, you wouldn't include amounts you paid for living-away-from-home allowance because these amounts are not assessable income (but check this with the ATO).

Withholding for allowances

The rules of reporting through Single Touch Payroll - Allowances

Lump Sum A - Termination
Lump Sum A - Redundancy
Lump Sum B
Lump Sum D
Lump Sum E

Lump sum payments may include earnings such as:

  • redundancies
  • payments in lieu of notice
  • payments of annual leave on termination.

Lump sum payments are a complex area. Chat to your advisor or check with the ATO for more guidance.

The rules of reporting through Single Touch Payroll - Employment termination payments 

CDEP Payments

Assign to pay items for:

  • Community Development Employment Project (CDEP) scheme wages
  • CDEP scheme participant supplement from a Centrelink payment.
CDEP payments
Exempt Foreign IncomeThis could be assigned to pay items such as salary, wages, commissions, bonuses and allowances that are exempt from Australian tax.Exempt foreign employment income
ETPSee our topic Processing an employment termination payment (ETP) for more information on ETP.Taxation of termination payments
Superannuation

Superannuation

 

New ATO reporting categoryOld Payment Summary field nameMore information
Reportable Employer Super Contributions

Step 3, Assign earnings and deductions

  • Deductions, E

Reportable employer superannuation contributions

Deductions

Deductions

 

New ATO reporting categoryDescriptionATO reference

Deduction - Work Place Giving

Assign payroll categories that are donations made under a workplace giving arrangement. 

Workplace giving programs

Deduction - Union/Professional Assoc Fees

This might include payroll categories for:

  • union fees
  • memberships to professional associations.
Union fees, subscriptions to associations and bargaining agents fees
Not Reportable

All other deductions are usually considered not reportable. This includes payroll categories like:

  • salary sacrifice (that are exempt from fringe benefits tax)
  • child support
  • loan or car payments

This is because they may not need to be itemised on an employee's tax return.

 
PAYG Withholdings

PAYG Withholdings

 

New ATO reporting categoryOld Payment Summary field nameMore information

PAYG Withholding

Step 4, Check assignments are correct

Total tax withheld

This is automatically assigned and can't be changed.

Assigning ATO reporting categories

Before using Single Touch Payroll, you to assign ATO reporting categories to your earnings and deductions.

You need to do this for all earnings and deductions you've used in the current payroll year, and whenever you use a new earning or deduction.

 

To assign ATO reporting categories

To assign ATO reporting categories

  1. From the Payroll menu, choose Pay items.
  2. Click the ellipses button ( ... ) for the pay item and choose  Edit .

  3. From the ATO reporting category list, choose the appropriate category.
  4. Click Save.
  5. Repeat for all pay items.