All payment types are required to be reported for each income type. You should report all employee compensation that is reportable through Singel Touch Payroll (STP), and not separately itemised, as Gross earnings. You need to disaggregate (report separately) the following payments:
- Bonuses and commissions.
- Paid leave.
- Directors' fees.
- Salary sacrifice.
To read further information on the reporting guidelines on the amounts paid to employees, you can refer to the Australian Tax Office (ATO) website.
What has changed?
System-generated pay categories
We will update the pay category payment classification provided by default when creating a business on your behalf. New businesses that are created moving forward will also have the updated classifications assigned by default.
Pre-packaged Award pay categories
We will update the pay category payment classifications within pre-packaged awards. You will need to apply an award update to make sure the platform maps the award associated pay categories correctly.
Business-created pay categories
If you have created your own pay categories, you will need to review these pay categories and assess whether the payment classification needs updating to meet requirements.
Assign this classification if the pay category does not fall into any other definition provided below.
Allowance - award transport payments
It is a deductible expense allowance for the total rate specified in an industrial instrument to cover the cost of transport (excluding travel or cents per kilometre reported as other separately itemised allowances) for business purposes, as defined in section 900-220 of the Income Tax Assessment Act 1997.
Allowance - cents per km
It is a deductible expense allowance that defines a set rate for each kilometre travelled for business purposes that represents the vehicle running costs, including registration, fuel, servicing, insurance and depreciation into account.
It should not include any cents per kilometre allowances that you paid for travel between an employee's home and place of work unless it is a home-based business and the trip was for business purposes.
Allowance - laundry
It is a deductible expense allowance for washing, drying and/or ironing uniforms required for business purposes. This allowance is typically paid at a regular rate for each week of work or services performed and cannot include dry cleaning expenses or reimbursements. Uniforms refers to the approved categories of clothing defined by the ATO.
Allowance - other
It is any expense allowance not specifically addressed in any other allowance category (such as a car allowance - other than cents per kilometre - and uniform allowance) and/or for those expenses about private use (such as cents per kilometre for travel between home and work and laundry allowance for conventional clothing).
When creating a pay category for Allowance (Other), you need to enter an allowance description. Pay categories for JobKeeper and JobMaker should also remain classified as this allowance type.
Allowance - overtime meal
It is a deductible expense allowance defined in an industrial instrument that is more than the ATO reasonable amount, paid to compensate the employee for meals consumed during meal breaks connected with overtime worked.
Allowance - qualifications/certificates
It is a deductible expense allowance that you pay for maintaining a qualification that you indicate by a certificate, licence, or similar. For example, allowances to cover registration fees, insurance, licence fees, etc. that you expect to spend to maintain a requirement of the job.
Allowance - tasks
It is a service allowance that you pay to an employee to compensate for specific tasks or activities performed that involve additional responsibilities, inconvenience, or efforts above the base rate of pay. For example, higher duties allowance, confined spaces allowance, dirty work, height money, first aid, etc.
Allowance - tool
It is a deductible expense allowance to compensate an employee who is required to provide their own tools or equipment to perform work or services for the employer. For example, chef’s knives, divers’ tanks, trade tools, phone allowances.
Allowance - travel
It is a deductible expense allowance that is more than the ATO reasonable allowances amountfor domestic or overseas travel, undertaken for business purposes, which is intended to compensate employees who are required to sleep away from home. It is not a reimbursement of actual expenses, but a reasonable estimate to cover costs including meals, accommodation, and incidental expenses.
Bonuses and commissions
You would typically pay bonuses and commissions as lump sum payments rather than at each regular pay period. You usually pay bonuses to an employee in recognition of performance or services and may not be related to a particular period of work performed. While you usually pay commissions to an employee in recognition of performance or services, you may calculate it as a part of the proceeds or volume of sales. If you are paying a bonus or commission regarding overtime, you should classify this as Overtime.
Community Development Employment Projects (CDEP) payments
It relates to the wages of employees working under the CDEP scheme. The CDEP scheme has now ceased, but support arrangements are in place that require those remaining members of the scheme to be supported for the duration of its operation. There should not be any earnings reported under this payment classification as this will result in a validation error, preventing the lodgement of an STP event.
These are payments to the director of a company or to a person who performs the duties of a director of the company. Directors’ fees may include payment to cover travelling costs, costs associated with attending meetings, and other expenses incurred in the position of a company director.
ETP (Death benefit) - Code B
It is a multiple payment for a death benefit ETP code N for the same deceased person, where the latter payment is paid in a following financial year from the original code N payment.
ETP (Death benefit) - Code D
It is a death benefit payment directly to a dependant of the deceased employee. A dependant may include a spouse of the deceased; a minor child; a person who had an interdependency relationship with the deceased, or a person who was a dependant of the deceased just before the latter died.
ETP (Death benefit) - Code N
It is a death benefit payment directly to a non-dependant of the deceased employee. A non-dependant is a person who is not a dependant of the deceased and not a trustee of the deceased estate.
ETP (Death benefit) - Code T
It is a death benefit payment directly to a trustee of the deceased's estate. The person may be an executor or administrator who has been granted probate or letters of administration by a court.
ETP (Life benefit) - Code O
It is a life benefit payment as a consequence of employment, paid for reasons other than those provided in ETP (Life benefit) - Code R. Examples include an ex gratia payment, gratuity, or golden handshake, non-genuine redundancy payments, payments instead of notice, and some types of unused leave, under specific circumstances. It is the non-excluded part of the ETP.
ETP (Life benefit) - Code R
It is a life benefit payment as a consequence of employment, paid only for reasons of genuine redundancy i, e where the employer decides the job no longer exists), invalidity (the employee sustained a permanent disability), early retirement scheme (an ATO-approved plan that offers employees incentives to retire early or resign when the employer is rationalising or reorganising their business operations) or compensation for personal injury, unfair dismissal, harassment or discrimination. This is the excluded part of the ETP.
ETP (Multiple payments) - Code P
It is a multiple payment for life benefit ETP code O for the same termination of employment, where you need to pay the ammount in a following financial year from the original code O payment. It is the non-excluded part of the ETP.
ETP (Multiple payments) - Code S
It is a multiple payment for life benefit ETP code R for the same termination of employment, where you need to pay the amount in a following financial year from the original code R payment. It is the excluded part of the ETP.
Exclude from payment summary (income statement)
Assign this classification to any payments made to an employee that are not reported to the ATO and therefore not displayed on an employee's income statement. Examples include award overtime meal allowances and domestic or overseas travel allowances up to the reasonable allowances amount.
Exempt foreign employment income
These are earnings paid to an Australian resident, for tax purposes, who works in another country for 91 days or more for a continuous period, and the income is subject to tax in that country. The foreign income may be exempt from tax if the foreign service is attributable to anyone of the following:
- Non-government agency workers delivering Australian Official development assistance
- Operating a public fund declared by the Minister to be a developing country relief fund;
- Operating a public fund established and maintained to provide monetary relief to people in a developed foreign country impacted by a disaster (a public disaster relief fund);
- Prescribed charitable or religious institution exempt from Australian income tax because the location is outside Australia, or the institution is pursuing objectives outside Australia;
- Deployment outside Australia by an Australian government (or authority) as a member of a disciplined force.
Leave - ancillary and defence leave
Paid leave for absences such as for Australian Defence Force, emergency leave, eligible community service, and jury service.
Leave - cash out of leave in service
Leave entitlement earnings that you have paid out instead of the employee taking the absence from work. The option represents Fair Work entitlements as defined in an award, enterprise agreement, or contract of employment (for award and agreement free employees). When leave is cashed out, it reduces the balance of the entitlement, as occurs if the absence was taken, but on the date of payment, rather than over the duration of the absence.
Leave - other paid leave
All other paid absences not otherwise covered in the other leave payment classifications and regardless of rate of pay (full, half, reduced rate) must be reported under this payment classification. Examples include, but are not limited to: annual leave, leave loading, long service leave, personal leave, RDOs.
Leave - paid parental leave
Some employers offer paid parental leave and the Government Paid Parental Leave (GPPL) Scheme offers eligible employees, who are the primary carer of a newborn or adopted child. up to 18 weeks’ leave, paid at the national minimum wage. Generally, GPPL is paid by Services Australia to the employer to pay the employee, but both types of paid parental leave may be paid at the same time.
Leave - unused leave on termination
Any leave balances paid out on termination that are otherwise not deemed an ETP or lump sum payment.
Leave - worker's compensation
Any workers’ compensation payments received by an injured employee for the hours not worked, or not attending work as required, or if the employment has been terminated.
Lump Sum A (Type R)
All unused annual leave or annual leave loading, and that component of long service leave that accrued from 16/08/1978, that is paid out on termination only for genuine redundancy, invalidity or early retirement scheme reasons.
Lump Sum A (Type T)
Unused annual leave or annual leave loading that accrued before 17/08/1993, and long service leave accrued between 16/08/1978 and 17/08/1993, that you paid out on termination for normal termination that is, other than for a genuine redundancy, invalidity, or early retirement scheme reason.
Lump Sum B
Long service leave that accrued before 16/08/1978 that you paid out on termination, regardless of the reason for such termination.
Lump Sum D
It represents the tax-free amount of a genuine redundancy payment or early retirement scheme payment, up to the limit, based on the employee's years of service.
Lump Sum E
It represents the amount for back payment of compensation that accrued, or was payable, more than 12 months before the date of payment and is greater than the lump sum E threshold amount, being $1,200.
It represents a payment made to an employee that works extra time. It can include work done beyond their ordinary hours of work, outside the agreed number of hours, or outside the spread of ordinary hours, the times of the day, ordinary hours can be worked.
Return to work payment
It represents an amount paid to incentivize an employee to resume work, such as to end industrial action or to leave another employer. It does not matter how you describe the payments or paid them, or by whom.
If you have applied the Basic option to a leave category, this means there is no itemised pay category related to the earnings for that paid leave. For example, where an employee has taken annual leave, the platform records the employee's earnings against their default pay category.
All paid leave earnings to be itemised against the specific leave-related payment classifications. It is essential that you update the payment setup configuration for any affected leave categories using the Basic option to Report the Earnings for the Leave Taken Against another Pay Category option.
If you have applied the Custom option to a leave category, this means that you have already assigned the earnings for that paid leave to a pay category. Please make sure the payment classification for the pay category about paid leave aligns with STP requirements.
Report the earnings for the leave taken against another pay category option
If you have applied this option to the leave category, this means that you have already assigned the earnings for that paid leave to a pay category. Please make sure the payment classification for the pay category about paid leave aligns with STP requirements.
If you are reporting all leave against one leave-related pay category, e.g. Paid leave, you will need to review and update accordingly. For example, Jury Service Leave, Paid Parental Leave, and Annual Leave would need to be reported against three separate payment classifications. If you need to create new pay categories specifically related to paid leave, please refer to this article.
STP reporting requirements only require itemising paid leave earnings; hence any leave category using the payment setup option Do not Pay for the Leave Taken does not need to be updated.
For termination payouts, excluding death benefits, there would be platform pay categories that we automatically assign in the pay run to the leave payout earnings. The platform will automatically map these to the correct payment classifications.
If your employee has an effective salary sacrifice arrangement, the gross amount (pre-sacrificed amount) will need to be reported, as well as reporting salary sacrifice separately.
There are two new classification options added to the deduction category settings to meet these requirements:
- Salary sacrifice (superannuation); and
- Salary sacrifice (other employee benefits).
By default, any existing deduction category mapped to the deduction type, Reportable Employer Super Contribution (RESC) we will automatically assign the Salary Sacrifice (superannuation) classification. Please make sure the all other deduction categories about salary sacrifice arrangements align with STP requirements and manually update the mapping to the Salary Sacrifice (other employee benefits) classification.=