Payments you must report

Mandatory reporting

There are some withholding payments that are required to be reported under STP. They are generally paid through a payroll process by employers to their employees.

If you report these payments (and amounts withheld from them) throughout the year and finalise your STP data you will not need to provide the corresponding payment summaries to your employees or a PAYG withholding payment summary annual report to us.

Table 1: Mandatory reporting of gross payment or amount withheld (BAS labels W1 and W2)

Description	BAS labels (gross payment, amount withheld)	Payment summary type
A payment to an employee, such as salary or wages	W1, W2	INB (except INB-P) or FEI
A payment of remuneration to the director of a company	W1, W2	INB (except INB-P) or FEI
A payment to an office holder (for example, a member of the Defence Force)	W1, W2	INB (except INB-P) or FEI
A payment to a religious practitioner	W1, W2	INB (except INB-P) or FEI
A return to work payment to an individual	W1, W2	INB (except INB-P) or FEI
A payment for termination of employment	W1, W2	ETP (life benefit)
An unused leave payment	W1, W2	INB (except INB-P) or FEI
A payment of parental leave pay	W1, W2	INB (except INB-P)
A payment to an employee under certain labour mobility programs	W1, W2	INB (except INB-P)

INB: PAYG payment summary – individual non-business (NAT 0046)
INB-P: Individual non-business (pension)
FEI: PAYG payment summary – foreign employment (NAT 73297)
ETP: PAYG payment summary – employment termination payment (NAT 70868)

You must lodge a pay event even if the amount you were required to withhold from any of these payments was nil.

Voluntary reporting

You may choose to include voluntary reporting amount in your STP reports. These are not mandatory.

Reporting voluntary amounts through STP may help to streamline your reporting and compliance processes because it can replace other reporting requirements, such as payment summaries.

Table 2: Withholding payments that are voluntary to report of gross payment or amount withheld (BAS labels W1 and W2)

Description	Current BAS labels (gross payment, amount withheld)	Payment summary type
A payment that is covered by a voluntary agreement	W1, W2	Business and personal services income – 003
A payment under a labour hire arrangement or a payment specified by regulations	W1, W2	Business and personal services income – 001 or 002
A payment for termination of employment	W1, W2	ETP (death benefit)

PAYG payment summary – business and personal services income (NAT 72545)
ETP: PAYG payment summary – employment termination payment (NAT 70868)

You can also choose to include:

• RESC
• RFBA
• child support deduction amounts
• child support garnishee amounts.

If you choose to include RESC and RFBA in an STP report by 14 July in the next financial year and complete a finalisation declaration, you don't have to give payment summaries to your employees covering these amounts. You don't need to lodge a payment summary annual report covering these amounts.

If you choose to include child support deduction or child support garnishee amounts, you may no longer need to provide separate reporting directly to the Child Support Registrar, via your previously preferred reporting channel.

Payments that can't be reported through STP

Some payments can't be reported through STP.

These include:

• payments that are generally not paid through a payroll process
• payments made by payers to recipients that are generally not their employees, such as  
  • Services Australia
  • investment bodies and managed investment funds
  • purchasers of certain taxable Australian property.

Payers must continue to provide payment summaries and lodge a payment summary annual report for these withholding payments.

In addition, a payer can't include any payment made through payroll solution that is not a withholding payment – for example, partnership distributions and payments to suppliers.

Payments that can't be reported through STP

Description	Current BAS labels (gross payment, amount withheld)	Payment summary or annual report
A super income stream or an annuity	W1, W2	PEN or INB-P
A super lump sum	W1, W2	SLS
A social security or similar payment	W1, W2	INB
A compensation, sickness or accident payment	W1, W2	INB
Payment of income of closely held trust where tax file number (TFN) not quoted	Annual activity statement	Closely-held trust or Annual TFN withholding report
Recipient does not quote Australian business number (ABN)	W4	ABN or No ABN, AIIR
Dividend, interest and royalty payments	W3	N/A or non-residents, AIIR
Departing Australia superannuation payment	W3	DASP
Excess untaxed roll-over amount	W3	n/a
A payment to a foreign resident	W3	Free format or Foreign residents
Payments in respect of mining on Aboriginal land, and natural resources	Electronic payment	Free format
Distributions of withholding MIT income	W3	Free format or AIIR
Distributions by AMITs (including deemed payments)	W3	Free format (for example, AMMA statement), AIIR
Alienated personal services payments	W1, W2	Business and personal services income – 004
Non-cash benefits, and accruing gains, for which amounts must be paid to the Commissioner, except subdivisions 14-C and 14-D	W3 or Electronic payment	Most applicable
Shares and rights under employee share schemes (ESS)	W1, W2, where TFN quoted W3 only, where TFN not quoted	ESS
Capital proceeds involving foreign residents and taxable Australian property	Electronic payment	n/a

PEN: Super income stream
SLS: Super lump sum
AIIR: Annual investment income report,
DASP: Departing Australia superannuation payment
AMMA statement: Annual attribution MIT member statement
ESS: Employee share scheme.

Contractors

Payments made to contractors are not mandatory to report under STP. However, if you currently report contractors through your payroll solution, you should continue to do so under STP.

If you report payments to contractors and you have a voluntary agreement to have withholding applied, you don't need to provide a payment summary to these contractors.

If the contractors are managed outside of payroll using accounts payable you don't have to report payments to them under STP.

Rules for reporting amounts

Your STP report includes YTD amounts of salary or wages, allowances or other payments (as relevant), deductions and PAYG withholding for each employee included in that pay event.

These YTD amounts may be less than a previous report (for example, recovery of a current year overpayment) or can be zero.

There are limited circumstances where YTD amounts for specific payment types in your payroll are negative, typically where corrections cross financial years or cross related payers. This can result in some of the YTD amounts you need to report through STP also being negative.

If this occurs, it usually means an amendment is required to your STP reporting for an earlier financial year.

In very rare circumstances, YTD amounts can be negative when they are reported for:

• gross
• paid leave
• allowances
• overtime
• bonuses and commissions
• directors' fees
• lump sum type W
• salary sacrifice.

If any of the YTD amounts you report are negative, the overall amount of income for each income type you report in your STP report must still be zero or positive. This means that for each income type the total of Gross, Paid leave, Allowances, Overtime, Bonuses and commissions, Directors’ fees and Lump sum W, less salary sacrifice, must be zero or positive. Your solution will ensure you meet this requirement.

Not all amounts can be reported for all income types. The following table shows the amounts that can be reported against each income type.

Reporting available by income types

Income type	SAW	CHP	IAA	WHM	SWP	FEI	VOL	LAB	OSP
PAYG withholding	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Foreign tax	No	No	No	No	No	Yes	No	No	No
Exempt foreign Income	Yes	No	No	No	No	No	No	No	No
Gross	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Paid leave payment	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Allowances	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Overtime	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Bonuses and commissions	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Directors' fees	Yes	Yes	Yes	No	No	Yes	No	No	No
Salary sacrifice	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Lump sum payment	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No
Employment termination payment	Yes	Yes	Yes	Yes	Yes	Yes	No	No	No

Not all payment types are included in the employer (payer) totals. The following table shows the amounts that can be included for each employer total amount type.

Employer (payer) totals	Gross Total	PAYG withholding Total	CS Garnishee Total	CS Deduction Total
PAYG withholding Amount	Not included	Include	Not included	Not included
Foreign Tax Paid Amount	Not Included	Not included	Not included	Not included
Exempt Foreign Income Amount	Not Included	Not included	Not included	Not included
Gross Amount	Include	Not included	Not included	Not included
Paid Leave Payment Amount	Include	Not included	Not included	Not included
Payee Allowance Amount	Include	Not included	Not included	Not included
Overtime Amount	Include	Not included	Not included	Not included
Bonuses and Commissions Amount	Include	Not included	Not included	Not included
Directors' Fees Amount	Include	Not included	Not included	Not included
Salary Sacrifice Amount	Deduct	Not included	Not included	Not included
Lump Sum Payment Amount	Includes all except Type D	Not included	Not included	Not included
Payee Termination Payment Tax Free Component	Not included	Not included	Not included	Not included
Payee Termination Payment Taxable Component	Include	Not included	Not included	Not included
Payee Total ETP PAYG withholding Amount	Not included	Include	Not included	Not included
Payee Deduction Amount	Not included	Not included	Amount for type G only	Amount for type D only
Super Entitlement Amount	Not included	Not included	Not included	Not included
Payee RFB Amount	Not included	Not included	Not included	Not included

Rules for reporting foreign employment income

The classification of payments made to employees working in foreign countries depends on a number of factors, such as the time spent in the foreign country and the applicable tax treaties.

These rules detail how you can report and adjust these payments through STP:

• Payments to an employee posted to a foreign country should be reported using the foreign employment income (FEI) income type if amounts are withheld in that country.
• If no amounts are withheld for the foreign country, payments should be reported using the relevant other income type (such as salary and wages (SAW)).
• Employers should follow the Accounting for foreign tax instructions.

You must report payments made to employees posted overseas throughout the year, and foreign tax, and make adjustments as required. These adjustments can be reported in either a pay event or update event. The adjustments can be done throughout the year or at the end as part of the finalisation process.

You can use one or a combination of the following 3 methods to report:

1. Estimates – if you believe the employee will remain overseas for the qualifying period, treat that employee as earning foreign income from the beginning. If the employee’s status changes, adjust the employee's year-to-date figures accordingly. For example, if your employee is working overseas for a year and the payments are subject to withholding in that country, apply the withholding rate for that country from the beginning.
2. Actual – treat the employee as earning foreign income from the time they qualify for withholding in the foreign country.
3. Reconciliation – treat the employee as an employee working in Australia for the financial year and then reconcile the payments and withholding at the end of the financial year.

Reporting based on your current business structure

Your payroll solution will generate your STP report for your pay cycle by ABN, branch and business management software (BMS) ID. We use this combination of information, together with the Payroll IDs you report, to identify when we need to display a separate income statement to your employee.

Some businesses structure their payroll so that the same person may be paid by different combinations of ABN, branch and BMS ID. They may also have multiple Payroll IDs in the same payroll solution that relate to the same person (for example, where the person performs multiple jobs).

This section explains some of the circumstances where this occurs.

PAYG withholding branches

Some business entities register PAYG withholding branches to suit the structural, management and accounting arrangements of the organisation. When an entity registers a branch, it must report and pay PAYG withholding separately for each branch.

If you have registered multiple PAYG withholding branches, you must conduct your STP reporting separately for each branch.

Multiple payroll solutions

If you currently use multiple payroll solutions, you can report separately from each payroll solution. This will be identified by the payroll solution via a unique BMS ID, which forms part of the STP report.

Most products will allocate the BMS ID for you as part of making their products STP-enabled. If you have more than one payroll solution, you will need to ask your DSP about your BMS ID.

When the employee’s payer changes

Your employee may have income attributed to different ABNs, branches, and BMS IDs during a financial year. If this is the case, each combination will result in a separate income statement displayed on the employee’s myGov account.

You must finalise each income statement (that is the combination of ABN, branch and BMS ID and Payroll ID). You can choose whether you finalise the income statement during the year or at the end of the year (by 14 July). However, you should consider whether:

• your previous ABN or branch will still be active. You cannot finalise your STP reporting if the ABN or branch has been cancelled
• you will still have authorisation to report on behalf of your previous ABN or branch
• you will still have access to the payroll solution you reported from.

If your business structure changes, the ABN and branch under which you have been generating your STP reporting may change. If this occurs, you must:

• finalise your STP reporting under the ABN and branch you have been using for your STP reporting. You can choose whether you do this before you start reporting for the new ABN and branch or later (up until 14 July). However, you should consider whether  
  • your previous ABN or branch will still be active. You cannot finalise your STP reporting if the ABN or branch has been cancelled
  • you will still have authorisation to report on behalf of your previous ABN or branch
  • you will still have access to the payroll solution you reported from
• start your STP reporting under the new ABN and branch using zero YTD employee amounts.

 

Multiple employee records

We use a combination of the employee identity information you supply (such as their TFN, name and date of birth) and the Payroll ID to match your STP report to the correct ATO taxpayer record so we can display the employee's information in their income statement.

Where an employee is recorded more than once under the same ABN, branch and BMS ID then each payroll record of the employee must be reported using a unique payee Payroll ID. This is so we can identify for which taxpayer you are reporting separate payroll records and display the correct information. Each Payroll ID must have separate YTD amounts reported.

For example, where an employee works within an organisation under 2 separate roles or awards and has been created as if they are 2 unrelated employees, the employee can be reported under multiple payee Payroll IDs within a single pay event.

Some payroll solutions may use the same Payroll ID for more than one person, such as where the second person is a death beneficiary of the person originally assigned that Payroll ID. In this situation you must ensure that you report unique payee identity information so that we can match the STP report to the correct person’s ATO taxpayer record.

Remitting PAYG withholding

If you notify your PAYG withholding liability on an activity statement, you should continue to follow your existing processes. If you are a large withholder you must continue to pay the amounts you withhold to us electronically.

Note: If you are a large withholder, follow your existing process. See When to pay and report on activity statements.

Find out about

• Correcting employer level information through STP
• Correcting your PAYG withholding liability