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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

 

Superannuation

 

Deductions

 

PAYG Withholdings

 

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

  • From the Payroll menu, choose Pay items.
    • Click the ellipses button ( ... ) for the pay item and choose  Edit .
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  • From the ATO reporting category list, choose the appropriate category.
  • Click Save.
  • Repeat for all pay items.
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    titleEarnings 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.

     

    		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.

    		Taxation of 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.Processing an employment termination payment (ETP)
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    titleSuperannuation
    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

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    titleDeductions
    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.
    		 
    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.

    		 
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    titlePAYG 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.
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    titleTo assign ATO reporting categories

     

     

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    Setting up Single Touch Payroll reporting

    Task 1 - Check payroll details for Single Touch Payroll reporting

    Employee information required for Single Touch Payroll

    Task 2 - Connect to the ATO for Single Touch Payroll reporting

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