Under Single Touch Payroll (STP), specific types of allowances and deductions are to be separately itemised on the Income Statement (Pay Slip).
For STP submission, the separately itemised allowances and deductions are grouped and reported by category.
The different methods for reporting allowances are detailed in this ATO publication: Withholding for allowances.
From version 2010.10 onwards, changes have been made to allow allowance accounts to be configured to report exactly as specified in the ATO publication referenced above.
These changes mean that the old payment summaries will no longer report correctly and these have been removed from the system. Payment summaries have been superseded by STP and should not be used going forward.
The account configuration screen for allowance accounts now looks like this:
- Is Allowance: The item will be reported as an allowance in STP.
- Include in PAYGW (Is Taxable): Tax will be calculated on the allowance and withheld when using pay wages.
- Include in Gross: The amount of the allowance will be included in STP as gross wages.
- Include in Allowance Tuple: The amount of the allowance will be reported separately in the STP allowances tuple with the selected allowance description. If other allowance is selected, then the allowance type is reported as the name of the account (this can be overridden by entering an alternate allowance description in the memo field of the account).
- Note that Include in Gross and Include in Allowance Tuple are mutually exclusive options. If Include in allowance tuple is selected, then an allowance type must be selected.
- Exclude from Ordinary Time Earnings: If this option is ticked, SGC will not be calculated on the allowance when using pay wages.
The available allowance types are:
- Other (the allowance type will be the account name or memo if overridden).
Note that there are also two new allowance types relating to JobKeeper, but these should not be used for standard allowances. For more information, please see here.