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  • What you need to report

    Under Single Touch Payroll (STP), there are a number of payments subject to withholding that are either:

    This section provides the details on these payments, the impact on business activity statements (BAS), pay as you go (PAYG) withholding payment summaries and annual reports.

    Mandatory reporting

    These withholding payments are required to be reported under STP. They are generally paid through a payroll process by employers to your employees.

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

    A finalisation declaration is a declaration in the approved form given to the Commissioner of Taxation by 14 July stating you have fully reported for the financial year and for each of your employees using Single Touch Payroll. You are then not obliged to give payment summaries to your employees (although you may still choose to) or a payment summary annual report to the Commissioner.

    If you do not report and finalise these amounts through STP you will continue to be required to give a payment summary to your employees and a payment summary annual report to the Commissioner.

    Mandatory reporting labels

    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 the Seasonal Labour Mobility Program

    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 submit 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 certain withholding payments in your STP reports. These are not mandatory. However, STP offers the ability to streamline your reporting as opposed to having a number of separate reporting processes to help you achieve efficiencies of real-time reporting and help with your compliance processes.

    You can also choose to include reportable employer superannuation contributions (RESC) and reportable fringe benefit amount (RFBA) for your employees. If you choose to include these amounts in a report by 14 July in the next financial year and complete a finalisation declaration you are not obliged to give payment summaries and a payment summary annual report to the Commissioner of Taxation covering these amounts.

    If you choose not to report these amounts through STP, you will be required to give payment summaries to your employees and a payment summary annual report to the Commissioner covering these amounts.

    Voluntary reporting labels

    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)

    Cannot be reported

    Some payments cannot 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
      • Department of Human Services
      • investment bodies and managed investment funds
      • purchasers of certain taxable Australian property.
       

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

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

    Payments that cannot be reported

    Description

    Current BAS labels (gross payment, amount withheld)

    Payment summary / annual report

    A superannuation income stream or an annuity

    W1, W2

    PEN or INB-P

    A superannuation lump sum

    W1, W2

    SLS

    A social security or similar payment

    W1, W2

     

    INB

    A compensation, sickness or accident payment

    W1, W2

    Payment of income of closely held trust where tax file number (TFN) not quoted

    Annual activity statement

    Closely-held trust / Annual TFN withholding report

    Recipient does not quote ABN

    W4

    ABN / No ABN, AIIR

    Dividend, interest and royalty payments

    W3

    N/A / Non-residents, AIIR

    Departing Australia superannuation payment

    W3

    DASP

    Excess untaxed roll-over amount

    W3

    N/A

    A payments to a foreign resident

    W3

    Free format / 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 / 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 / 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: Superannuation income stream, SLS: Superannuation 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 under STP. However, if you currently report contractors through your payroll solution, you should continue to do so under STP.

    Where you report payments to contractors, and you have a voluntary agreement to have withholding applied, you do not need to provide a payment summary to these contractors.

    Where the contractors are managed outside of payroll (that is, via accounts payable) you do not have to report payments to them under STP.

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    Last modified: 04 Jun 2018QC 54550