Table of Contents

STP Phase 2 - Employee detail changes in Reckon Accounts

Employee Details

There will be no automatic updates to your existing employee records whilst upgrading your Company file to Reckon Accounts 2023.

It is the obligation of the Payroll officer to ensure that the employee records are updated in accordance to the ATO STP Phase 2 requirements.

These changes can be made individually per employee. Reckon Accounts 2023 includes a Migration Assistant utility to perform bulk updates in order to assist users.


Income Type Code

The Income Type Code is the main tax category that identifies the employee's income type that helps the ATO determine if the payee is taxed correctly, using concessional reporting arrangements, or other applicable factors and obligations.

The Tax Category is one of the factors for the Tax Treatment Code that identifies the payee setup for the calculation of the PAYGW and their circumstances to the payer.

A new Income Type dropdown will be available on Reckon Accounts 2023 on the Employees records.


You can report multiple income types throughout the year.

Each pay reports the Income Type used at the time of processing. It will copy the Income Type value from the Employee record. We have made this editable during and after processing your pay to allow users to dynamically update it if needed.


In addition, the Income Type dropdown is also available on the YTD Adjustment transactions.


The settings within the Employee record are treated as the source of truth. When a change is detected in the pay cheque, a warning will be displayed, alerting the user to update the income type based on the employee record is they wish.


The Income Type was also added to the IIF file with the header name: INCOMESTREAM.


The supported Income Type in Reckon Accounts are:

The following are excepts from Reporting the amounts you have paid | Australian Taxation Office (ato.gov.au)

INCOME TYPE

DESCRIPTION

SAW – Salary & Wages

Most STP reporting will use this income type. It covers the most common kinds of payments to an employee, like regular salary and wages.

If the payments you are making to your employee don't belong in one of the other specific income types, use the SAW income type.

CHP – Closely Held Payees

If you have 19 or fewer employees and are using the concession available for reporting closely held payees through STP in relation to the individual, then you must use this income type to tell us that you're using the concession.

WHM – Working Holiday Makers

This income type tells us about the income a person has earned while they were a working holiday maker. This means they're a temporary visitor to Australia holding a subclass 417 (working holiday) or subclass 462 (work and holiday) visa.

SWP - Seasonal Worker Programme

This income type tells us about the income a person has earned while they were participating in certain labour mobility programs.

Use this income type to report payments to participants in the Seasonal Worker Program and participants in the Pacific Australia Labour Mobility (PALM) scheme who have told you on a TFN declaration that they are a non-resident.

VOL – Voluntary Agreement

Use this income type to report payments that are subject to a voluntary agreement for PAYG withholding. This income type relates to contractors that have a voluntary agreement in place.


Home Country

A new Home Country dropdown will be available on the employee's records only when the Income Type is set to WHM – Working Holiday Maker.

The Working Holiday Maker checkbox in the Taxes window has been hidden.

The Home Country was also added to the IIF file with the header name: HOMECOUNTRYCODE.


STP Tax Category

PAYG Tax Rates are calculated in Reckon Accounts using the Tax Code setting for each employee.

The STP Tax Category fields does not affect any payroll calculation and are used for STP Phase 2 reporting purposes only. Therefore, continue to use the relevant Tax Code for each employee.

For example, an STP Tax Category: Actor – TFT does not require you to change your Tax Code to 2-TFT. If no Tax scale is appropriate, use 8-No TaxC and enter the correct Tax Rate.

The STP Tax Category Code is another tax category that identifies the employee's income type that helps ATO determine if the payee is taxed correctly.

The Tax Category is one of the factors for the Tax Treatment Code that identifies the payee setup for the calculation of the PAYGW and their circumstances to the payer.

The only Income Type applicable for the STP Tax Category are:

  1. SAW – Salary & Wages
  2. CHP – Closely Held Payees

ACTORS

HORTICULTURIST AND SHEARERS

SENIORS AND PENSIONERS

  1. Actor – TFT
  2. Actor – No TFT
  3. Actor – Promotional
  4. Actor – Daily Performance
  1. Horticulturists/Shearers – TFT
  2. Horticulturists/Shearers – Foreign Resident
  1. Seniors/Pensioners – Single
  2. Seniors/Pensioners – Member of a couple
  3. Seniors/Pensioners – Illness separated


The Income Type was also added to the IIF file with the header name: STPTAXCATEGORY.


Medicare Levy

The following Medicare Levy options are available for those claiming a Surcharge, Exemption, or Reduction.

Do not select anything if you do not need to claim. To check if you qualify, check with your health care provider, your accountant, or with the ATO.

Medicare Levy is an amount paid in addition to the tax paid on the employee's taxable income. This helps fund the national health system, Medicare, and calculated at 2% of your taxable income.

  1. Medicare Levy Surcharge is an additional payment on top of the Medicare Levy based on the employee's income.

The Medicare Levy Surcharge was also added to the IIF file with the header name: MLVARIATION.


  1. A Medicare Levy Exemption is a payment exemption for a full or part of the year of the Medicare Levy.
Medicare Exemptions are set by using Tax Scale: 5-Full ML or 6-Half ML

  1. The Medicare Levy Reduction helps reduce the Medicare Levy they have to pay if eligible.

The Medicare Levy Reduction was also added to the IIF file with the header name: DEPENDANTS.


The following options are available within Reckon Accounts 2023:

MEDICARE LEVY SURCHARGE

MEDICARE EXEMPTIONS

MEDICARE LEVY REDUCTION

  1. NONE
  2. 1.00%
  3. 1.25%
  4. 1.50%
  1. Half exemption
  2. Full exemption
  1. NONE
  2. 0 – Spouse only
  3. 1 to 9
  4. A – 10 or more children
  5. NA – No reduction


Medicare Levy Rules

  • When a Medicare Levy Surcharge is applied an employee cannot apply exemptions and reduction.
  • When a Full Medicare Levy Exemption is applied an employee cannot apply surcharge and reduction.
  • If Half Medicare Levy Exemption is applied an employee cannot apply the surcharge, however a reduction will be available.
  • When a Medicare Levy Reduction is applied an employee cannot apply the surcharge, however half exemption will be available.
  • A Single Senior or Pensioner cannot apply for Medicare Levy Reduction as they have no Spouse.


Commissioner's Instalment Rate

A payer and a contract worker (payee) can enter into a voluntary agreement to withhold an amount of tax from each payment they make to the contractor. This can be the contractor's PAYG instalment rate, called the Commissioner's instalment rate (CIR) or a flat rate of 20%.

A new Use Commissioner's Instalment Rate checkbox is available on the employee's records only when the Income Type is set to VOL – Voluntary Agreement.


The Commissioner's Instalment Rate was also added to the IIF file with the header name: CIR.


Contractor ABN

A new Contractor ABN field will be displayed in the employee's records only when the Income Type is set to VOL – Voluntary Agreement. This is a required field for any employee under Voluntary Agreement.

A Contractor ABN cannot be the same as the Company ABN.


The Commissioner's Instalment Rate was also added to the IIF file with the header name: CONTRACTORABN.


Employment Type Code

The Employment Basis Type is updated to support the employee work type to provide context to the amount reported.

To assist in the upgrade process, the existing Types have been updated and the unsupported Employment Basis have merged with supported types for STP Phase 2 during the file upgrade.

Reckon Accounts 2022

Reckon Accounts 2023

Notes

Full Time (FT)

Full Time (F)

Abbreviation aligned with ATO code.

  1. Full Time Temporary (FTT)
  2. Apprentice (AP)
  3. Other (O)

Full Time (F)

Transitioned to full time.

Casual (CA)

Casual (C)

Abbreviation aligned with ATO code.

Casual Part Time (CAPT)

Part Time (P)

Transitioned to part-time.

Part Time (PT)

Part Time (P)

Abbreviation aligned with ATO code.

n/a

Death Beneficiary (D)

Newly added type.


The supported Employment Type in Reckon Accounts are:

The following are excepts from How to report employment and taxation information through STP Phase 2 | Australian Taxation Office (ato.gov.au)

EMPLOYMENT BASIS

DESCRIPTION

Full time

A person who is engaged for the full ordinary hours of work as agreed between the payer and the payee or set by an award (or both), registered agreement or other engagement arrangement. 

Part time

A person who is engaged for less than the full ordinary hours of work, as agreed between the payer and the payee or set by an award (or both), registered agreement or other engagement arrangement.

Casual

A person who does not have a firm commitment in advance from a payer about how long they'll be employed or engaged, or for the days or hours they'll work. 

Death Beneficiary

The recipient of an employment termination payment (ETP) death beneficiary payment who is either a dependant, non-dependant or trustee of the estate of the deceased payee.


Cessation Type Code

A new Cessation Type field is available in Reckon Accounts 2023. The field will only become active when a Release Date is entered.


The Cessation Type was also added to the IIF file with the header name: CESSATIONTYPE.


A warning will be displayed if a Release Date is present, but the Cessation Type reason was not set.


The supported Cessation Types in Reckon Accounts are:

The following are excepts from When an employee transfers or leaves | Australian Taxation Office (ato.gov.au)

CESSATION TYPE

DESCRIPTION

Voluntary Cessation

An employee resignation, retirement, domestic or pressing necessity or abandonment of employment.

Transfer

The administrative arrangements performed to transfer employees across payroll systems, move them temporarily to another employer (machinery of government for public servants), transfer of business, move them to outsourcing arrangements or other such technical activities.

Redundancy

An employer-initiated termination of employment due to a genuine bona fide redundancy or approved early retirement scheme, or a non-genuine redundancy.

Ill health

An employee resignation due to medical condition that prevents the continuation of employment, such as for illness, ill health, medical unfitness or total permanent disability.

Dismissal

An employer-initiated termination of employment due to dismissal, inability to perform the required work, misconduct, or inefficiency.

Deceased

The death of an employee.

Contract cessation

The natural conclusion of a limited employment relationship due to contract/engagement duration or task completion, seasonal work completion, or to cease casuals that are no longer required.




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