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STP Phase 2 - Income Type in Reckon Accounts 2023

ATO requirements

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

This grouping of income has always been required, and has been updated for the STP Phase 2 data structure required by the ATO.

This tax category is one of the factors for the Tax Treatment Code – Character 1 and 2 – used to identify the payee setup for the calculation of PAYGW and the employment relationship to the payer.

The Income Types are:

  1. Salary and Wages
  2. Closely Held Payees
  3. Inbound Assignees to Australia
  4. Working Holiday Makers
  5. Seasonal Worker Programme
  6. Foreign Employment
  7. Joint Petroleum Development Area
  8. Voluntary Agreement
  9. Labour-Hire
  10. Other Specified Payments


Reckon Accounts implementation

New income type field

A new Income Type dropdown is available within the employee records in Reckon Accounts 2023 by going to the Payroll and Compensation Info.

The only supported types are:

  1. SAW – Salary and Wages
  2. CHP – Closely Held Payees
  3. WHM – Working Holiday Makers
  4. SWP – Seasonal Worker Programme
  5. VOL – Voluntary Agreement


Company file post-upgrade

No Income Type will be assigned to any new or existing Employees after the Company File is upgraded.


Updating records

There are two ways to assign the Income Type on the employee record:

  1. Manually – by editing each employee record.
  2. Migration Assistant – use the utility for STP Phase 2 Setup under the Employees menu.


Reporting income types

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 if needed.


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


Additional Requirements

Home Country for Working Holiday Makers (WHM)

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


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


Commissioner's Instalment Rate for Voluntary Agreement

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 for Voluntary Agreement

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.


The Contractor ABN was also added to the IIF file with the header name: CONTRACTORABN.


In-product messaging

Income Type: General

After upgrading your Company file to Reckon Accounts 2023, performing an STP lodgement export without an Income Type will display the following warning as Reckon Accounts 2023 STP lodgement data is in the STP Phase 2 format which requires an Income Type:


Income Type is mandatory for each employee. When missing, a warning will display when saving the employee record:


The setting within the Employee record is treated as the source of truth. When a change is detected in the pay cheque, a warning will be displayed, inquiring whether the user wishes to update the pay cheque based on the employee record.


Income Type: WHM

When the Income Type is set to WHM – Working Holiday Maker but a Home Country was not set, the following dialogue opens:


A warning will be displayed when setting the Income Type to VOL – Voluntary Agreement, but the Contractor ABN was not set.


A warning will be displayed when setting the Income Type to VOL – Voluntary Agreement, but the Contractor ABN entered was invalid.


A warning will be displayed when the Income Type was set to VOL – Voluntary Agreement, but the Contractor ABN entered is the same as the Company ABN.


IIF Files

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


Income type descriptions

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

INCOME TYPE

CODE

DESCRIPTION

SAW – Salary & Wages

“SAW”

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

“CHP”

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

“WHM”

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

“SWP”

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

“VOL”

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.


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/reckonaccounts

Or Log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

STP Phase 2 - Tax Treatment Code in Reckon Accounts 2023

STP Phase 2 - STP Tax Category in Reckon Accounts 2023

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