What other components are
There are components you need to report through STP that influence the amount you pay to an employee but relate to the employee themselves rather than the kind of payment they are receiving.
For these components, you don't need to include an income type or country code in your STP report.
These components are:
The reporting of deductions does not change under STP Phase 2.
There are 2 deduction types you can report:
- union and professional association fees (deduction type F)
- workplace giving (deduction type W).
Union and professional association fees (deduction type F)
You should only report union fees and professional association fees deducted from payroll as deduction type F.
No other post-tax deductions can be reported as deduction type F.
Workplace giving (deduction type W)
When an employee has asked you to collect money from their pay to donate, you may have set it up as a:
- salary sacrifice arrangement
- workplace giving deduction.
You should only report workplace giving deductions as deduction type W. Don't include salary sacrifice contributions to a charity. These are reported as Salary Sacrifice Type O (other employee benefits).
The workplace giving deductions you report as deduction type W include:
- where you have established a workplace giving program in accordance with ATO guidelines and you have chosen
- to reduce the amount of PAYG withholding from the employee's pay to account for the deduction
- not to reduce the amount of PAYG withholding from the employee's pay.
- where you have not established a formal workplace giving program but make a post-tax deduction from the employee's pay to donate to their nominated Deductible Gift Recipient (DGR).
If your STP solution offers the functionality, you can choose to report child support amounts through STP. If you do so you:
- won't need to report those amounts separately to Services Australia
- must still pay the required amounts to Services Australia using the payment information specified in the Child Support notice issued to you. Do not pay child support amounts to us.
If you can't or choose not to use STP to report child support amounts then you must continue to report directly to Services Australia using your existing reporting channels.
There are 3 kinds of child support amounts:
- Child Support Deductions which are made according to a deduction notice. These can be reported through STP.
- Child Support Garnishees which are made according to a garnishee notice. These can be reported through STP.
- employee-initiated child support amounts when there is no notice. These cannot be reported through STP.
Special rules apply if you are making corrections to child support garnishee or child support deduction amounts.
If you received a notice titled ‘Notice to commence Child Support Deductions’ or ‘Change to your Child Support Deductions’, these are deduction notices issued under section 45 of the Child Support (Registration and Collection) Act 1988. This type of notice requires an employer to deduct a fixed dollar amount each pay period. Rules for protected earnings amountsExternal Link apply to these deductions.
Report these amounts in your STP report as a Child Support Deduction (deduction type D).
When you have not been able to deduct the full amount from the employee's pay
Sometimes there may be situations where you:
- haven't deducted the full amount from the employee's pay
- couldn't deduct at all.
These situations can include when the:
- protected earnings amount reduces the amount available to deduct
- employee was not paid for that pay period.
- have made a deduction report the amount you have deducted
- couldn't deduct any amount from the employee's pay, report this to Services Australia using an alternative child support reporting channelExternal Link.
Some STP-enabled solutions may offer additional functionality that allows you to tell Services Australia about these employees by including them in your STP reporting with unchanged YTD child support amounts. If you use this functionality you do not need to report separately to Services Australia.
When an employee leaves
A notice from the Child Support Registrar requires you to deduct from an employee's pay. If that employee leaves, you must tell Services Australia by including their cessation date and cessation reason in your STP report.
If you receive a notice titled ‘Notice to pay money directly to the Child Support Registrar pursuant to section 72A’, this is a garnishee notice issued under section 72A of the Child Support (Registration and Collection) Act 1988. This type of notice requires an employer to garnishee either a:
- percentage of the employee’s income
- lump sum
- fixed amount each pay.
These deductions are not subject to the rules about protected earnings amountsExternal Link.
You should report these amounts in your STP report as a Child Support Garnishee (deduction type G).
If you have been unable to garnishee the full amount under the garnishee notice (for example, because the employee was not paid), you do not need to tell Services Australia separately. This is different to Child Support Deductions.
Your employee may have made arrangements with you to pay child support amounts even though you have not received a notice from the Child Support Registrar.
These employee-initiated child support amounts must not be reported through STP.
Starting to report child support amounts through STP
There are a number of things you need to do before you can report child support amounts through STP:
- Check whether your payroll solution offers child support reporting functionality. If it does, make sure you understand the functionality that is offered. For example, if an employee is not paid during a pay period, your payroll solution may not have the functionality to use STP to report that you did not deduct.
- Make a plan for how you will meet your reporting obligations to Services Australia
- through STP
- separately (when required) using an alternative child support reporting channelExternal Link.
- Decide when you will lodge your first STP report that includes child support amounts.
- Check that your payroll solution is set up correctly to minimise issues in your reporting. Common mistakes may include
- The pay period you have set up in the product doesn’t match the pay period you use when paying your employees.
- Pay codes for employee-initiated deductions (which are not reportable) are mapped to report as Child Support Deductions or Child Support Garnishees.
- Pay codes for Child Support Deductions or Child Support Garnishees are not mapped to the correct deduction type for STP reporting.
- Contact Services Australia to confirm your garnishee payment details, such as the payment reference number you use when you pay amounts to them. These details may change when you start reporting Child Support Garnishee amounts through STP.
- Tell Services Australia your starting YTD child support deduction balances.
- Lodge your first STP report that includes child support amounts.
Telling Services Australia your starting YTD child support deduction balances
As STP reporting uses YTD amounts for the financial year, Services Australia need to know your starting YTD balances. They will use this information to:
- compare your reporting for each pay period
- work out your pay period child support amounts.
You'll only need to tell Services Australia your YTD starting balances once.
To tell Services Australia what your starting YTD child support balances are, use one of the following methods.
Actions using STP
Actions using your other child support reporting channels
Method 1: Start in the first pay of the financial year
If you start reporting child support amounts in the first pay period of a new financial year, you do not need to separately tell your starting YTD child support balances to Services Australia. This is because Services Australia know that STP reporting begins from zero at the start of the financial year.
Method 2: Update event
Before you run your first pay in which you will report child support amounts through STP, send an 'Update event' to us. The update event should include the YTD child support balances for your employees that have child support deduction or garnishee amounts.
An update event tells Services Australia that you are just updating your information. They can use those balances to compare and identify your new child support amounts going forward.
Method 3: Overlapped reporting
Send your STP report for the first pay period where you are reporting child support amounts.
Services Australia will use the YTD amounts in this STP report as your starting YTD balances.
Use your preferred child support reporting channel to report your child support deduction amounts. You must include your child support deductions from the start of the calendar month up to and including the pay period you have sent the STP report for.
As there is no earlier STP reporting to compare the reported YTD balances against, Services Australia can use this separate report to process your child support amounts for the final pay periods before you started using STP to report child support amounts.
Example: telling Services Australia your starting YTD balances
Linh has decided to start reporting child support amounts for their employees through STP in February. They need to tell Services Australia the starting YTD child support balances for their employees.
They have decided to use the Overlapped Reporting method and their STP report for the last pay period in the month will be the first that includes child support amounts.
Linh processes the pay as normal and sends their STP report (including the child support YTD balances) to the ATO. The ATO will provide the Child Support YTD balances to Services Australia so that they know what Linh’s starting YTD balances are.
A Child support deductions report form (CS4964) is completed, covering:
- each pay in February before they started to include child support amounts in the STP report
- the current pay (which has included the child support starting YTD balances in the STP reporting).
They send the CS4964 form directly to Services Australia so that the child support deductions can be processed.
The overlap of the STP report and the Child support form CS4964 covers the last pay of the month meaning that:
- Services Australia can use the CS4964 form to process Linh’s child support amounts, because there is no earlier STP reporting to compare it to
- Linh has told Services Australia the starting YTD balances so that from the next pay period (the first pay in March) they only need to use STP to report for child support.
- You can report an employee's reportable fringe benefits amounts (RFBA) reportable employer super contributions (RESC) through STP.
The reporting rules for RFBA and RESC have not changed with STP Phase 2.
How to report RESC and RFBA through STP
You only report RFBA amounts if the total taxable value of certain fringe benefits you provided to your employee exceeds $2,000 for the FBT year (1 April – 31 March).
If you choose to report this information, you may provide YTD RFBA and RESC either:
- through a pay event (if the information is available in payroll) throughout the financial year, or
- through an update event throughout the financial year.
This can be at any time up until the due date to make the declaration that you have finalised your reporting for that employee for the financial year.
Once you’ve reported an amount, you should continue to report the amount in all following pay events, even if the YTD amounts remain the same.
If you can't (or choose not to) provide RFBA or RESC through STP, you must provide this information on a payment summary to the employee and provide us with a payment summary annual report. The payment summary must not include amounts reported through STP.
Relationship between reporting RESC and RFBA, and salary sacrifice amounts
Often the amounts you report as salary sacrifice super (salary sacrifice type S) are also considered reportable employer super contributions (RESC). However, there are other contributions you may make to super for an employee that are RESC but not salary sacrificed.
Similarly, reportable fringe benefits amounts (RFBA) may be related to the amounts you report as salary sacrifice other benefits (salary sacrifice type O) but can differ because:
- benefits an employee receives from salary sacrificing may not also be RFBA
- benefits an employee receives may be RFBA but were not obtained from salary sacrificing
- actions, such as employee contributions, may change the value of RFBA relative to the salary sacrifice.
When reporting RESC and RFBA through STP, you need to ensure you understand the relationship between reporting RESC and salary sacrifice type S, and the relationship between reporting RFBA and salary sacrifice type O so that you can report correctly.
Example 1: RESC and salary sacrifice type S
Jackie earns $60,000 per annum. During the employment process she negotiated an extra 2% ($1,200) super above the super guarantee (SG) rate. Because Jackie negotiated with her employer to pay extra super this must be reported as RESC.
Jackie has also decided to salary sacrifice $10,000 into super.
This is reported in STP Phase 2 as:
- Gross $60,000
- Salary sacrifice type S (super): $10,000
- RESC $11,200.
The RESC value is higher than the salary sacrifice type S because it includes:
- the salary sacrifice amount of $10,000
- the extra $1,200 of employer super she negotiated.
Example 2: RFBA and salary sacrifice type O
Ross earns $80,000 per annum. Instead of carrying his heavy laptop, he has decided to salary sacrifice a tablet worth $2,000 which will be primarily used for work purposes.
This is reported in STP Phase 2 as:
- Gross $80,000
- Salary sacrifice type O (other employee benefits): $2,000
- RFBA $0.
The tablet is reported as Salary sacrifice type O because all salary sacrifice items are reported in STP Phase 2. However, because the tablet is being used primarily for work purposes it is not subject to FBT, so is not reported as RFBA.End of example
You must include information about your employees’ super entitlements.
You must continue to report and pay your employees' super entitlements through your existing SuperStream solution (including the Small Business Superannuation Clearing House). This has not changed with STP Phase 2.
You must report either:
- your YTD employer super liability for each employee in the STP report (super type L)
- the YTD ordinary time earnings (OTE) for each employee in the STP report (super type O).
If your payroll solution allows you can also report both.
There are some circumstances where it may not be clear what to report such as where your:
- YTD employer super liability or your employee’s OTE is zero – report zero
- employees are entitled to receive super contributions above the minimum super guarantee (SG) liability – report this higher amount if you can't separately identify these in your payroll solution
- employee is a member of a defined benefit fund and you make super contributions for the employee – report this amount if it is available in your payroll system. This would usually correspond to the YTD amount shown on the employee’s payslip. Otherwise, report zero as the super liability amount.