STP and Allowances

NarellePaterson

I Haven't started STP yet I am just trying to make sure I have all pay and allowances correct can anyone tell me what allowances need to be reported seperatly ? I currently pay a tool allowance and on occasion a leading hand allowance but I am not sure if they should be shown how do I do all this in Reckon Permier?

Neil_6428218

Hi Narelle,

In last years release we introduced the below Tax Tracking Types to cover the reporting of Allowances via STP

Allowances – Car
Allowances – Transport
Allowances - Laundry
Allowances - Meals
Allowances - Travel
Allowances – Other

The below Help File goes through setting up the file for STP (including setting up the allowances).

https://help.reckon.com/ID2036258

NarellePaterson

Yes I have seen this but I currently pay a Tool allowance and I am not sure how this should be set up? In allowance - other or should it not be included in allowances at all?

Neil_6428218

Hi Narelle, 

You would use Allowances - Other

Heres an ATO article regarding allowances and where they should be reported in STP (and Payment Summaries):
https://www.ato.gov.au/Business/PAYG-withholding/Payments-you-need-to-withhold-from/Payments-to-employees/Allowances-and-reimbursements/Withholding-for-allowances/

Bill_10201512

Hi Neil,

When using Allowances other, and it is for a tool allowance, do i mark it as tax free, gross payment or additional payment?

As a tool allowance, it should be included for PAYG(W) but not included as a gross payment. how does reckon treat it at the moment if i mark it as tax free? i thought by marking it as gross payment it would increase the gross income, which if i am reading the ato guideance correctly i shouldn't include it.

it would be helpful if i was able to see the STP field "Other PAYEVNTEMP8" so i konw it is being recorded correctly.

thanks bill

Neil_6428218

Hi Bill, 

It sounds like you're using Reckon One, I don't work on Reckon One myself, but from what the team just told me:

The Tax Applicable field will determine whether the Allowance is included in PAYG Calculations or not (by selecting either Gross Payments or Tax Free). 

The Show as Allowance on Payment Summary option determines whether the Allowance is reported as part of the Gross or as an Allowance via STP.


So it seems you need to select Gross Payments so that PAYG is calculated and also tick the option so it reports as an Allowance.

Bill_10201512

This reply was created from a merged topic originally titled STP & tax treatment of tool allowance. Hi,

Im having trouble applying the ATO guidance on tool allowances.

A tool allowance should not form part of the gross income, but should have tax withheld. Reckon does not seem to have an option for this. it only has the tax free, gross payment or additional payments (which the question mark link to 'schedule 5' is broken).

none of these options seem to fit the bill for a deductible allowance.

When using Allowances other, and it is for a tool allowance, do i mark it as tax free, gross payment or additional payment?

please help!

it would also be helpful if i was able to select the STP field "Other PAYEVNTEMP8" so i konw it is being recorded correctly to the ATO.

thanks bill

NarellePaterson

I am pretty sure my tool allowance forms part of the gross...not sure if it is supposed to or not I also gave up trying to figure out if  SGL should be paid on it so I think
I just pay it on all just in case...such generous boss I am

NarellePaterson

After going through all this setting up for STP previously I have now noticed that our award MA000025 states that tool , industry & licence allowances are included in hourly rates of pay (which means I have been paying tool allowance on top of hourly rate) and should be included when working out penalty and overtime and on ATO it does say allowances that have been folded into normal wages are not treated seperately for Withholding so does this mean I DO NOT have to record them as seperate allowances. Can anyone help I have contacted fairwork, ATO several times and accountants and am not sure that anyone has convincingly answered my question . Can anyone help or has anyone come across this . It seems the Award says one thing and ATO wants something else. Help !!! I want to get this right.

Acctd4

If that’s what the award states then that’s what you go by. It means the amounts for these allowances don’t need to be shown separately (eg as “Allowances”) ☺️

Your other option - if you DO want to show them as separate components (eg including the separate “Allowances”) - is to breakdown the total amounts accordingly as per the relevant Award rates:

eg, either:

Hourly Pay $30

OR

Hourly Pay $20

Allowance 1 $5

Allowance 2 $5

(Note the above amounts are for a simplified example only - You would need to determine the correct figures as per the relevant Award)

NarellePaterson

I think its easier to just include them in pay rate because if you show them seperatly but need to include for overtime figures some fancy calculations need to be made and it does look a little odd and hard to understand on the payslips It can be done but not ideal ...for me at least. I was just worried that ATO wanted them to be seperate but they really couldn't tell me decisively either way.

Acctd4

The ATO couldn’t help because they don’t govern Employer Payroll setup - It’s the Award under either Fair Work (for Pty Ltds) or your State Government legislation (for sole traders, partnerships & trusts) that applies ☺️

NarellePaterson

Fairwork tell you to talk to ATO and ATO tell you to talk to Fairwork so I have given up.

Acctd4

I think Fair Work are a little cautious these days, due to STP (because STP IS an ATO requirement)

With both, it also depends who you speak to - some staff are more knowledgeable about the specifics than others! 🤦🏻‍♀️

NarellePaterson

Yes well you can't say I didn't try I have contacted both several times hoping to get someone with a definitive answer.