Converting Allowances settings to make STP compliant

Follow

Under Single Touch Payroll (STP), specific types of allowances are to be separately itemised on the Income Statement, similar to what currently occurs with payment summaries. The difference with STP however, is that the separately itemised allowances are to be grouped and reported by category. 

The rules for categorising allowances are aligned with the ATO's Withholding for allowances tables that can be accessed here.

To edit any pay category settings go to Payroll Settings > Pay Categories. Click on the pay category name and then click on the "Payment Summary Classification" dropdown list. You will notice the additional allowance classifications added to this list:

Screen_Shot_2018-06-07_at_08.13.53.png 

Existing allowance based pay categories whose payment summary classification was set as "Allowance" is now defaulted to "Allowance (Other)".

How to classify allowances

Using the ATO's methodology, each allowance category relates to one of the six Withholding for allowances table. We have provided an explanation of each allowance below: 

 

Allowance (Other)

Where an allowance is defined in the below table (Table 1) to be reported as separately itemised allowances, they are to be classified as "Allowance (Other)".

Screen_Shot_2018-06-07_at_12.06.30.png  

Allowance (Car)

Any allowance meeting the definition in the below table (Table 2) is to be classified as "Allowance (Car)".

Screen_Shot_2018-06-07_at_08.46.10.png

Allowance (Laundry)

Any allowance meeting the definition in the below table (Table 4) is to be classified as "Allowance (Laundry)".

Screen_Shot_2018-06-07_at_08.49.07.png 

Allowance (Meals)

Any allowance meeting the definition in the below table (Table 5) that would otherwise be itemised in the payment summary, is to be classified as "Allowance (Meals)". 

Screen_Shot_2018-06-07_at_08.57.59.png

Allowance (Transport)

Any allowance meeting the definition in the below table (Table 3) that would otherwise be itemised in the payment summary, is to be classified as "Allowance (Transport)".  

Screen_Shot_2018-06-07_at_09.02.27.png

Allowance (Travel)

Any allowance meeting the definition in the below table (Table 6) that would otherwise be itemised in the payment summary, is to be classified as "Allowance (Transport)".  

Examples here include domestic or overseas travel allowance above the reasonable limit and all overseas accommodation allowances.

Screen_Shot_2018-06-07_at_09.08.46.png

 

If you are unsure of what your allowances should be classified as, please consult with the ATO, your payroll advisor, bookkeeper or accountant. 

 

Powered by Zendesk