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All purpose allowances STP Phase 2

NarellePaterson

So is there anywhere I can find step by step instructions on how to deal with all purpose allowances in STP Phase2. I need to know exactly how and what to set up so it all works.They have to be dissagregated from base rate and have to be reported seperatly for STP and included in any overtime payments but that part does not get reported as allowance. I have the webinars but don't have time to watch the whole lot again.😫 I have my Reckon acredited person coming tomorrow but I would like to at least try to understand how this works

Accepted answers

All comments

Acctd4

Hi Narelle

Not all components need to be shown separately - it depends on what it's for, how it's calculated & how it's worded in the Award/contract.

The general advice we have received from our industry expert (who is on the board for STP2 with the ATO) is that all components are to be broken down IF possible however, where a breakdown isn't known or it is referenced in the Award/contract as part of a total, this does not need to be disaggregated 😊

Joanne_9158978

I am looking at the same issue and feel your angst. I haven't figured it out totally yet but will come back to you when I have. All I can think of is setting the allowances up as additions and overriding the overtime automatic rate amount with the correct figure (base + allowances) . You can have the allowances automatically prefill with the hours that you enter against the hourly rate and annual leave etc.

NarellePaterson

Shaz

I use MA000025 Electrical award .

I am not sure how you find out the correct answer I have contacted both ATO and Fairwork in the past they give very little info unless they have changed their tune of late but as far as I can see on the ATO it says that all purpose allowances need to be reported seperatly I would love it not to be so but unless someone can prove to me otherwise this is the only conclusion I can come to . I was hoping that reckons update would have an easy way to deal with it but it seems not.

Excerpt From ATO page

"All-purpose allowances

Many awards include allowances that are added to an employee's hourly rate and are paid for all purposes, such as when calculating payments for leave or overtime.

In STP Phase 2, you must separately report all-purpose allowances against the relevant allowance type unless one of the exceptions above applies.

Some employers may have historically set up their payroll using a single rate that includes the employees’ hourly rate and all-purpose allowances. However, it is important that those allowances can be identified because they are treated differently in different situations and not being able to identify them may disadvantage your employee. For example, how the ATO treats allowances in a tax return is not the same as how Services Australia treats those allowances when assessing a benefit claim.

You should follow your DSP's instructions about setting up your payroll solution to continue to meet your Fair Work obligations and report all-purpose allowances correctly in STP."

They don't make it easy for anyone this has cost money time and stress I only ope I can sort it by pay day this week.

Acctd4

@NarellePaterson Yes, I can see how this directly contradicts that 😩

I have asked in our industry group if there's anything in writing that references it so I'll let you know the feedback on this.

NarellePaterson

I rang Fairwork today 😩they were absolutley no help at all I wasn't even sure she knew what I was talking about

NarellePaterson

My Reckon person has broken down the all purpose allowances reduced the base hourly rate so the allowances will now add on seperatley (which will I am sure confuse the employees) I am not sure how this is going to affect the overtime etc I will see when I do some pays!! I am not sure they could have made this any more confusing for us if they tried.😫😵

Rav

Hi guys

We're finalising a help guide around handling all-purpose allowances with STP Phase 2 in Reckon Accounts 2023.

It'll be from a software perspective only and I'll share it here as soon as I've got word from the team that it's ready.

Acctd4

Great news @Rav 🙏🏻👏🏻

NarellePaterson

Great Thanks @Rav

I will have to do a pay run on Thursday if the set up Reckon comes up with is different than what I have currently set how will that effect STP reporting of the previous pay or pays. Will it matter or will I have to do file replacements?

Leanne Chudleigh_10112928

Is there any news on this? I am using the reckon payroll app & web and have tried so many different options. If I put the disaggregated all purpose allowances in as allowances they are not taxed when they should be. I need to do a pay run now for a plumbing business and am not sure what to do.

bella_10864825

https://community.reckon.com/discussion/comment/20637377#Comment_20637377

Hi Narelle I am about to set up STP phase 2 and the more I read the more stressed I become..We are an electrical company and pay our employees the all purpose allowances so I am hoping it will become clear before I do a payrun on thursday..

NarellePaterson

Bellla

We set up payroll items for each All purpose allowance per hour (which you have to work out yourself as the awards don't seem to give you that hourly breakdown for those allowances) then took those amounts off the usual hourly base rate so the new hourly rate plus all allowances should equal what they would get paid when all purpose allowances were included. I have overtime rates set up at rates that include the all purpose allowance amounts but not seperated as, from what I understand, the allwances do not need to be reported in overtime rates. I have yet to do any public holiday or annual leave and loading to see how that all works. I work out everything manally in an old school wages book first so I can actually understand what I am paying and checking super is worked out correctly then see if it all flows through into how Reckon works it out. Clear as mud !!!! It's all very annoying that the ATO demands this but doesn't really look into how all this affects business especially small businesses. It's cost me time money and sleep not to mention the chewed fingernails and I only hope our employees understand the new appearance of their payslips and my attempt at explaining it to them. Good luck.

bella_10864825

https://community.reckon.com/discussion/comment/20637772#Comment_20637772

Hi Narelle

I can relate to your comments about time,money & sleep and was chewing on my thumbnail as I was reading.I am at the stage of employing a Reckon accredited person to do it for me although when it comes to the allowances it doesn't seem 100% clear to them either. I am assuming that if you don't select the new tax tracking type in the RHS column everything stays as it was before.It's not clear all.

NarellePaterson

I don't think anyone knows with 100% certainty!! I don't know what the RHS column is?? but I think it's manditory to begin reporting STP phase 2 asap I think Reckon have secured an extension till maybe September but that would mean some of your year would be STP 1 and the other when you change would be STP phase 2 not sure how much that matters? I had my Reckon accredited person come and I can tell you it was a help would have still been tearing my hair out at lease I know that it is set up to what we think it should be and it seems to working out so far and now that I have started working with it I think I should be able to deal with any minor issues the payroll throws at me. I paid and watched the webinars and was still confused so It was worth the $$ to get the Reckon person in but I still think it's unfair that we had to pay for something the ATO implemented to make their job easier.

bella_10864825

https://community.reckon.com/discussion/comment/20637789#Comment_20637789

Hi Narelle The right hand side column I was referring to when you are working in the Migration Wizard there are 2 columns.One shows how you currently have items set up and the RHS column gives you the option to change the Tax Tracking on a particular item..I am wondering if I have to change any of the allowances from Gross to Other General I think it says.

Tiffany

My suggestion to The Reckon Development team would be to offer another Calculate based on quantity selection when setting up the All purpose allowance to start with. Instead of

Calculate this item based on hours... select this item if you want this payroll item to be calculated based on Regular Pay and Overtime Pay hours worked
TO
Calculate this item based on hours... select this item if you want this payroll item to be calculated based on Regular Pay and a selection of pay rates ie. sick, RDO,public holiday or any other pay rates that the company has created in their payroll rates. NOT Overtime Pays

Then it would automatically calculate on only those when your enter the amount of hours worked in those pay rates

Rav

Hi all,

Apologies for the delay, there's been a fair of bit of review on this topic. I'm happy to advise the team have created a help guide for general guidance on all purpose allowances with overtime now that STP Phase 2 is in effect.

Check it out below 👇

https://help.reckon.com/article/yjoz3wfubr-handling-all-purpose-allowances

Hope this helps 😊

Tiffany

Hi Rav

Any chance of getting the all purpose allowance to have the "Calculate based on quantity" upgraded to have an option to only calculate it on the number of normal hours base rate pay items, then it wouldn't need to be manually entered ?

NarellePaterson

I have come accross my first snag in my set up . I'm calculating annual leave and the 171/2% leave loading is calculating without the all purpose allowances as far as I understand this is not correct. Leave loading should be calculated on bae rate plus all purpose allowances and should those allowances be reported in STP as would normal hours .I'm trying to figure out a way around this any advice??

Tiffany

Hi Narelle

I am in the same boat and to tell the truth kinda getting annoyed that we as paying users of Reckon are bringing these problems and errors to the attention of Reckon. Some help would be appreciated otherwise we are going to have pay slips that are a page and a half long if we also have to do Leave loading separately on the 2 or 3 all purpose industry allowances we pay. Or do we just have the holiday pay rate incorporating all the industry allowances ? I have just signed up for the STP 2 webinar for $79 and hoping that it gives me some answers but once again it is another purchase expense and time costing expense from us as users of Reckon.

😠

NarellePaterson

Tiffany,

I too have signed up for yet another seminar (this is my 3rd) as far as I can see it's all a bit hit and miss. I had to spend hours on pays today even after a phone call to my Reckon advisor, he helped ,but then some things didn't work out and I kept having to go in and out reconfigerating payroll items and seeing if that fixed my problems I finally got the pays done but it really is not an ideal workaround I had to put in some figures manually, I only hope that at the end of the day I have done the right thing and I can remember what to do next time annual leave occures. I also worry about figures all working out for BAS as well as STP reporting. I feel like I am making this all up as I go along and I do not like that feeling. Between ATO, fair work and Reckon I find it hard to get any clarity in all this. I started researching and asking questions on the all purpose allowances when STP first started and got no definate answers from anyone and here we are years into this and still not much further along!! Getting pays correct is hard enough without all this BS😟 Crossfingers this seminar can sort it for us.🤞

Tiffany

Hi Narelle

It appears that webinar was another cost to the company including my wages to find out that we have to manually calculate leave loading !!! I'm sorry but surely Reckon has to fix this or is every other accounting package in the same boat ?😡 I hope you can get more out of it than me and now do we have to do update files for STP for each week ?

NarellePaterson

Tiffany

I did not seperate the leaving loading payroll item for allowances I just called the new item Leaving loading on allowances and bunched them together I hope that is the right thing to do or as you say there will be another 3 items on payslips....ahhhhh.

Acctd4

Hi Tiffany

Just to clarify, Reckon's help files/webinars are free. However, this webinar was not run by Reckon but by another Accredited Partner (like myself)

Unfortunately, the STP (& now STP2) requirements are government stipulations that have evolved over time so - like you - all payroll software providers are feeling the pain to try to deliver on them & iron out the issues as they are identified.

The problem with Leave Loading is that it's currently a built-in Payroll Item, not one that we create ourselves so it's hard-coded to work in the way it's always been intended to. Now that STP2 wants things changed, we're trying to navigate how best to achieve that.

In Reckon's defence, compared to their competition, Reckon delayed releasing the STP2 migration to ensure they had completed sufficient beta testing on various scenarios & have actually made the standard process very automated. However - as we all know - even with all the best intentions & stringent testing, technology can be unpredictable & can never account for every single possible situation.

If you are struggling &/or have any specific questions on STP2, you're welcome to shoot me an email & I'll do my best to help ☺️

NarellePaterson

Hi Shaz

I was not aware of any free webinars the only ones I was emailed ( From Reckon) about cost money , hosted by Reckon & presented by Reckon Accredited Trainer Clayton Oates from QA Business.I have attended those 2 plus paid for another one on Monday.

Acctd4

Hi Narelle

" ... presented by Reckon Accredited Trainer Clayton Oates from QA Business ..." Yes that's correct - Clayton is a Reckon Accredited Partner, like me. He has put together these webinars independently (with Reckon's input)

You can find free videos & webinars online - Reckon have a You Tube channel & you should be able to also find some resources if you do a Google search. They're on the Reckon Training Academy too: https://academyau.reckon.com/login (which is also free) 😊

659441

Still no word or update, a month out of the Phase 2 rollout, how Reckon is fixing the issue of customers having to manually calculate Leave Loading 17.5% on Allowances. Surely this is an important issue. Some of us are dealing with dozens of employees in this category weekly. NEEDS FIXING!

NarellePaterson

659441

I attended a webinar yesterday and as far as I can figure the manual work arounds are all that is happening so I guess we will have to get used to it...not ideal and I am certainly not happy. About time the ATO, Fairwork Awards and software providers got together and worked out if these things can be done before they roll out requirements that business have to adhere to.It is getting more and more difficult to understand all this payroll stuff and good luck getting any definate info that you can rely on and it seems other than hiring someone to do it for you we just have to bumble about and hope we are doing it right.

Tiffany

Unfortunately 659441 Member we have to manually calculate the leave loading on the annual leave as the ATO requires all the disaggregated pay items. Not a good outcome but it is actually the ATO requesting all this. As per my other discussion it could be fixed I think by .....

I have created a new Leave Loading payroll item as discussed in the Webinar and I cannot understand why cant Reckon create an extra window in the payroll item that will allow me to select what payroll items the 17.5% loading is calculated on and we can then create one or several Holiday all purpose allowances that the new Leave Loading can calculate the 17.5% on. I know this will mean we have more allowances on the payslips but it would alleviate the necessity to manually calculate the leave loading. Being in the Construction Industry we do not have time in Lieu so often our employees will leave work half an hour here or an hour there through the week so with our average 25 employees I basically have to do a spreadsheet to ensure the correct amount is what I am entering.

659441

Thank you both Tiffany and Natalie for your responses. I decided not to attend the additional webinar and can see by comments I've read, that not a lot was to be gained by attending. We are obviously not alone in having these issues, and hopefully Reckon will take advice (Tiffany - yours would solve it!) and work out the problem quickly. Until then, we'll just keep plugging along :) Cheers, Michelle

Graham Boast

Here is my method of handling this. I think it overcomes many of the issues raised here, is straightforward to use, and ticks the STP2 compliance boxes.

Disaggregation of Gross with Rolled Up / All Purpose Allowances under STP2 — Reckon Community

Graham Boast 0409317366

NarellePaterson

I am not sure if I am over thinking this but I have come across another issue to do with casual loading and all purpose allowances . Casual loading should be calculated with a base rate plus all purpose allowance so do I report the allowance plus the loading under allowance for STP or just the normal rate.

Tiffany

Hi Narelle

I just used the Fair Work payroll calculator for all our employees including casuals. It will give you the hourly pay rate (that includes industry allowances etc.) For our casuals I disagreggate the Industry allowances and use that as the Normal Hours base rate for STP and then I allocate the allowances amounts, the same as for our full time employees. The Fairwork Payroll calculator also has the overtime rates for casuals as that is worked out differently and the allowances dont need to be disaggregated on overtime. I hope this helps😉

Tiffany

The paycheck plus calculator is https://calculate.fairwork.gov.au/FindYourAward

NarellePaterson

Thanks Tiffany we pay above award rates so not sure if the pay calculator will help but I'll check it out and see if it at least helps me understand. I am so over all this just when I think I have it all sorted something else crops up so annoyed by all involved paying people a wage should not drive me to the brink if it wasn't our own business I'd quit lol

Graham Boast

Hi Narelle

The casual loading is just normal gross wages. I would handle it as follows. Note that I use a different method than Reckon. The result is the same, and it's a much simpler method.

Handling Rolled Up Allowances under STP2 in Reckon.pdf

When you have read the above file, there is an extra step to set up the casual rate.

Set up a new Payroll Item - Wage - Hourly Wages - Overtime Pay (yes overtime - trust me)

Casuals are usually only entitled to Long Service Leave. Tick "Include in "Every hour worked" leave accruals if you accrue Long Service Leave. Leave unticked if your industry has an industry LSL fund like CoInvest.

Once you set this up, enter the Hourly Pay (this is the all purpose or rolled-up rate and includes the base rate plus included allowances), the new rate set up above, plus any overtime rates you regularly use for the person. Set up the allowances section and the offset rate as either the weekly amount for fulltime or an hourly rate for part time or variable hours. If your industry pays leave loading, include the item Holiday Loading (17.5%). It won't do anything until you use the annual leave rates.

For part-time or variable hours, you will need to have the allowances and offset payroll items set as "calculate based on quantity".

When you run the pay, you simply enter the hours just like you have always done, but for part-time variable hours, you also enter the quantity in the allowances and the allowance offset.

All the STP components report correctly (see pdf). Importantly, nothing is significantly different to how you used to process the pays AND there is no changing rates.

Tiffany

https://calculate.fairwork.gov.au/FindYourAward

Tiffany

Hi Graham

I just wanted to let you and others know that in our award which is the Building and Construction Award the casuals overtime rates are calculated differently so we cannot use the Reckon overtime calculation that will just multiply the Hourly rate by 1.5 for time and a half or 2 times for Double time. The overtime is calculated and paid as per the Fairwork calculations which is as follows:

Overtime is the calculated in 2 parts by the hourly pay that includes all allowances and casual 25% loading ie $29.39 x 1 Plus the other component which is calculated at the hourly pay rate not including 25 % loading ie $23.5105 x .5 for Time and a Half or x 1 for Double time

So time and a half rate is Base incl 25% load + Allow $ 29.39

Plus Hourly Pay (excluding 25%) x .5 23.5105 x .5 $11.76

Total time and a half rate is $41.15

Double time would be $29.39

Plus Hourly pay (excluding 25%) x 1 23.5105 x 1 $23.51

Total Double time rate is $52.90

Just hope this helps some people and ensures that the casual employees receive the correct overtime rates.

Graham Boast

Hi Tiffany

Thanks for engaging in this discussion. My aim is get the method simple AND right, and I have misunderstood the issue with casual overtime.

Mathematically, Time and a Half is Base x 1.25 + Base x 0.5 and Double Time is Base x 1.25 + Base x 1. Simplifying this, Time and a Half is Base x 1.75 and Double Time is Base x 2.25.

Casual Time & Half = Base+Allow x 1.75 = 41.14

Casual Double Time = Base+Allow x 2.25 = 52.90

You could set up 2 new overtime rates - Casual Time & Half with a multiplier of 1.75 and Casual Double Time with a multiplier of 2.25 and it would give you the same result.

The Allowances and the offset would still be entered as the "standard" hours worked, as the allowance "component" of casual overtime is just considered overtime.

I wonder if the ATO tried to make this as complex as possible!

Tiffany

Thanks Graham that works and yes I am starting to believe the ATO didn't really think this through very well at all !

Cheers

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