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AccountRight Plus and Premier, Australia only

You need to assign an ATO reporting category to each of the payroll categories you use. This lets the ATO know how to treat each type of payment you're reporting through Single Touch Payroll (STP).

Get ready for STP Phase 2

STP Phase 2 is the ATO's expansion of their payroll reporting requirements. This includes expanding the list of ATO reporting categories to better define the amounts paid to employees. For example, the ATO reporting category Gross payments is being split into more specific payment types, like overtime and bonuses.

To learn more about STP Phase 2, visit the ATO website.

The current list of ATO reporting categories will apply until STP Phase 2 begins. But you or your bookkeeper can start assigning the new ATO reporting categories in preparation for the change. This will reduce the stress of the transition by assigning the new categories over the next few months. Learn more about getting ready for STP Phase 2.

Which ATO reporting category should I assign?

As your business, award and employee agreement are unique, we can't tell you which ATO reporting categories you should assign to your payroll categories.

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 payroll categories. The STP Phase 2 reporting categories can be assigned now but they won't apply until STP Phase 2 begins.

Wages
ATO reporting category (Phase 1)ATO reporting category (Phase 2)More informationATO links
Gross Payments

Gross payments
Overtime
Bonuses and commissions
Director's fees
Cash out of leave in service
Unused leave on termination
Paid parental leave
Workers' compensation leave
Ancillary and defence leave
Other paid leave

Include payroll categories you use for paying salary and wages.

For STP Phase 1, this includes categories for:

  • holiday pay
  • sick pay
  • overtime
  • bonuses
  • commissions
  • director's fees

For STP Phase 2, payments that don’t sit into any of the main categories, assign them to Gross payments (but check this with the ATO).

The rules of reporting through Single Touch Payroll

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

Allowance - cents per km
Allowance - award transport payment
Allowance - travel and accommodation
Allowance - overtime meals
Allowance - laundry
Allowance - tools
Allowance - tasks
Allowance - qualifications/certificates
Allowance - other

This includes payments you make to cover your employees’ work-related expenses.

For allowances that don’t sit into any of the main categories, assign them to Allowance – Other (but check this with the ATO).

Typically, you wouldn't include amounts you pay 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

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

Lump Sum A - Termination 
Lump Sum A - Redundancy 
Lump Sum B 
Lump Sum D 
Lump Sum E (coming soon)
Lump Sum W

Lump sum payments may include payroll categories such as:

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

For STP Phase 2:

Lump Sum W — this has been added which is for return to work payments.

Lump Sum E — you'll only be able to set this up after your business moves to STP Phase 2. The way these lump sum payments work is changing for STP Phase 2 Learn more on the ATO website

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

Expanding Single Touch Payroll (Phase 2)

CDEP Payments

CDEP Payments

Assign payroll categories for:

  • Community Development Employment Project (CDEP) scheme wages
  • CDEP scheme participant supplement from a Centrelink payment.
CDEP payments
Exempt Foreign IncomeExempt Foreign Income

This could be assigned to payroll categories such as salary, wages, commissions, bonuses and allowances that are exempt from Australian tax.

Exempt foreign employment income
ETP - Taxable component
ETP - Tax free component
ETP - Taxable component  
ETP - Tax free component

These are payroll categories used to track the taxable and tax-free components of employment termination payments.

ETPs are concessionally taxed up to a certain limit, or 'cap'.

Certain types of termination payments are tax free up to a certain limit, for example, if the ETP is because of redundancy or early retirement.

Taxation of termination payments
Superannuation

The ATO Reporting Category is automatically assigned for superannuation categories set up with the following Contribution Types :

  • Superannuation Guarantee (expense)
  • Employee Additional (deduction)
  • Redundancy (expense)
  • Spouse (deduction)

ATO reporting category (Phase 1)ATO reporting category (Phase 2)More information

Superannuation Guarantee

Superannuation Guarantee

This information is reported to the ATO to check that employee super funds are receiving the correct amounts.

Reportable Employer Super ContributionsReportable Employer Super Contributions

Use this to assign superannuation categories which handle 'reportable' superannuation payments (as classified by the ATO guidelines).

Note that this option only appears for Employer Additional (expense), and Salary Sacrifice (deduction) contribution types.

 

Salary Sacrifice

Use this to assign salary sacrifice super categories.
Deductions
ATO reporting category (Phase 1)ATO reporting category (Phase 2)DescriptionATO reference

Deduction - Work Place Giving

Deduction - Work Place GivingAssign payroll categories that are donations made under a workplace giving arrangement.Workplace giving programs

Deduction - Union/Professional Assoc Fees

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
ETP - Tax WithholdingETP - Tax WithholdingUse this reporting category when an ETP has been made to an employee.Taxation of termination payments
 

Salary sacrifice - other employee benefits

For deductions that are for benefits from an effective salary sacrifice arrangement, including those exempt from FBT.Salary sacrifice arrangements
Not Reportable 

All other deductions are usually considered not reportable. This includes payroll categories like loan or car payments. This is because they may not need to be itemised on an employee's tax return.

If you're not sure if a deduction is reportable, check with your accounting advisor or the ATO.

 
Taxes

The ATO Reporting Category for the PAYG Withholding payroll category can only be set to PAYG Withholding.

ATO reporting categoryATO reporting category (Phase 2) More information

PAYG Withholding

PAYG Withholding

This is automatically assigned and can't be changed.

This category reports all tax withheld from the employee, including any extra PAYG that may be deducted.

Assigning ATO reporting categories

You need to assign ATO reporting categories to all wage, deduction and superannuation payroll categories you've used in the current payroll year, and whenever you create new ones.

If you're setting up STP for the first time, your AccountRight company file is checked to find any payroll categories that don't have an ATO reporting category assigned—so you can then assign one.

If you'd like to start assigning ATO reporting categories in preparation for STP Phase 2, you (or your bookkeeper) can do so within each payroll category.

To check for unassigned ATO reporting categories
  1. Go to the Payroll command centre and click Payroll Reporting. Employees paid in the current payroll year (including terminated employees) are included in the payroll check. You'll see a list of payroll categories you need to fix before you can connect to the ATO and start reporting using Single Touch Payroll.

  2. Click the arrow next to a payroll category in the errors list. The payroll category Information window appears.
  3. Choose the appropriate category from the ATO Reporting Category list. See above for information to help you select it, or speak to your accounting advisor or the ATO.
  4. Click OK.
  5. Repeat for all other payroll categories listed in the Check Payroll Details window.
  6. Click Check Payroll Details to refresh the list.
(Optional) Assign ATO reporting categories for STP Phase 2

The current (Phase 1) ATO reporting categories will apply until STP Phase 2 starts. But if you'd like to get a head start, you can assign the updated ATO reporting categories now.

If you need help choosing, check the info above or speak to your accounting advisor or the ATO.

  1. Go to the Payroll command centre and choose Payroll Categories.
  2. Click the Wages, Superannuation or Deductions tab.
  3. Choose the applicable ATO Reporting Category (Phase 2).
  4. Click OK.
  5. Repeat for each of your wage, super and deduction payroll categories.

  FAQs


Which payroll categories are not reportable?

Which payroll categories are not reportable?

In most cases, payroll categories that don't need to be included on an employee's tax return, are not reportable. Depending on your circumstances. this may include payroll categories for post-tax deductions and deductions that are exempt from fringe benefits tax. For example, loan or car payments

If you're not sure what reporting category to assign, talk to your accounting advisor or the ATO.

How do I assign salary sacrifice superannuation?

How do I assign salary sacrifice superannuation?

When reporting payroll amounts using Single Touch Payroll, gross wage amounts are reduced automatically by deduction amounts that are marked as a before-tax deductions. This includes salary sacrifice superannuation deductions.

Previously, to reduce taxable gross amount on payment summaries, you needed to assign the relevant payroll category (for example, salary sacrifice) to gross payments. You don't need to do this for single touch payroll reporting.

  • For STP Phase 1 the ATO reporting category Reportable Employer Super Contributions can be used for Salary Sacrifice (deduction) superannuation categories.
  • For STP Phase 2 the ATO reporting category Salary Sacrifice can be used for Salary Sacrifice (deduction) superannuation categories.

If you're not sure what reporting category to assign, talk to your accounting advisor or the ATO.