Table of Contents

STP Phase 2 - How Tax Treatment Code is designated in Reckon Accounts 2023

See How to report employment and taxation information through STP Phase 2 | Australian Taxation Office (ato.gov.au) for more information.

A valid Tax Treatment Code is automatically and dynamically generated in Reckon Accounts 2023 based on:

  1. Tax category – Character 1 and 2
  2. Options available for each tax category – Character 1 and 2
  3. Study and training support loans (STSL) – Character 3
  4. Medicare levy surcharge – Character 4
  5. Medicare levy exemptions – Character 5
  6. Medicare levy reduction – Character 6


Characters

Character 1 and 2

Characters 1 and 2 are defined by the following fields in the employee record:

  1. Income Type
  2. STP Tax Category
  3. Tax Code


Character 3

Character 3 is based on the Study and Training Support Loans (STSL) if permissible.

  1. True = "S"
  2. False = "X"


Character 4

Character 4 is based on the Medicare Levy Surcharge (MLS) if permissible. When a Medicare Levy Surcharge is selected:

  1. Blank = "X"
  2. 1.00% = "1"
  3. 1.25% = "2"
  4. 1.50% = "3"
  5. Medicare Levy Exemption (Character 5) will be "X"
  6. Medicare Levy Reduction (Character 6) will be "X"


Character 5

Character 5 is based on the Medicare Levy Exemption (MLE). This is defined by the use of the Tax Codes: 5-FullML or 6-HalfML.

  1. 5-FullML = "F"
    1. Medicare Levy Surcharge (Character 4) will be "X".
    2. Medicare Levy Reduction (Character 6) will be "X".
  2. 6-HalfML = "H"
    1. Medicare Levy Surcharge (Character 4) will be "X".
    2. Medicare Levy Reduction (Character 6) will be available.


Character 6

Character 6 is based on the Medicare Levy Reduction (MLR) based on family taxable income below a certain threshold and consideration of the Number of Dependants.

  1. Blank = "X"
  2. Spouse only = "0"
  3. 1 to 9 = "1" to "9"
  4. 10+ = "A"
  5. Medicare Levy Surcharge (Character 4) will be "X".
  6. Medicare Levy Exemption (Character 5) can be set to None or Half.


Scenarios with Income Type only

Regular Employee

The following uses the Income Type(s):

  1. SAW - Salary and Wages
  2. CHP - Closely Held Payees

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

No TFT claimed

1-NoTFT

“RN”

Allowed

Allowed

Not permissible

Not permissible

With TFT claimed

2-TFT

“RT”

Allowed

Allowed

Not permissible

Allowed

Full exemption

5-FullML

“RT”

Allowed

Not permissible

Allowed

Not permissible

Half exemption

6-HalfML

“RT”

Allowed

Not permissible

Allowed

Allowed

Custom Tax

8-No TaxC

“RT”

Allowed

Allowed

Not permissible

Allowed

Foreign Resident

3-NonRes

“FF”

Allowed

Not permissible

Not permissible

Not permissible

Australian resident with no TFN

4-NoTFNr

“NA”

Not permissible

Not permissible

Not permissible

Not permissible

Foreign resident with no TFN

4-NoTFNn

“NF”

Not permissible

Not permissible

Not permissible

Not permissible


Working Holiday Maker

The following uses the Income Type: WHM - Working Holiday Makers

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

WHM employee under a Registered Employer

8-No TaxC

“HR”

Not permissible

Not permissible

Not permissible

Not permissible

WHM employee under an Unregistered Employer

8-No TaxC

“HU”

Not permissible

Not permissible

Not permissible

Not permissible

WHM employee but a foreign resident with no TFN

4-No TFNn

“HF”

Not permissible

Not permissible

Not permissible

Not permissible


Seasonal Worker

The following uses the Income Type: SWP - Seasonal Worker Programme

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

Employee under the Seasonal Worker Programme

8-No TaxC

“WP”

Not permissible

Not permissible

Not permissible

Not permissible


Voluntary Agreement

The following uses the Income Type: VOL - Voluntary Agreement

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

Using CIR

8-No TaxC

“VC”

Not permissible

Not permissible

Not permissible

Not permissible

CIR not used

8-No TaxC

“VO”

Not permissible

Not permissible

Not permissible

Not permissible


Scenarios with STP Tax Category

Actor

Income Type:

  1. SAW - Salary and Wages
  2. CHP - Closely Held Payees

STP Tax Category:

  1. Actor - TFT
  2. Actor - No TFT
  3. Actor - Daily Performance
  4. Actor - Promotional

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

Actor with No TFT claimed

8-No TaxC

“AN”

Not permissible

Not permissible

Not permissible

Not permissible

Actor with TFT claimed

8-No TaxC

“AT”

Not permissible

Not permissible

Not permissible

Not permissible

Actor under Promotional

8-No TaxC

“AD”

Not permissible

Not permissible

Not permissible

Not permissible

Actor that had 3 or less performances per week

8-No TaxC

“AP”

Not permissible

Not permissible

Not permissible

Not permissible

Horticulturist and Shearer

Income Type:

  1. SAW - Salary and Wages
  2. CHP - Closely Held Payees

STP Tax Category:

  1. Horticulturist/Shearer - TFT
  2. Horticulturist/Shearer - Foreign Resident

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

With TFT claimed

8-No TaxC

“CT”

Not permissible

Not permissible

Not permissible

Not permissible

With TFT claimed but no TFN

4-No TFNr

“CT”

Not permissible

Not permissible

Not permissible

Not permissible

Foreign resident

8-No TaxC

“CF”

Not permissible

Not permissible

Not permissible

Not permissible

Foreign resident but no TFN

4-No TFNn

“CF”

Not permissible

Not permissible

Not permissible

Not permissible


Senior and Pensioner

Income Type:

  1. SAW - Salary and Wages
  2. CHP - Closely Held Payees

STP Tax Category:

  1. Senior - Single
  2. Senior - Member of a couple
  3. Senior - Illness Separated

SCENARIO

TAX CODE

Character 1 and 2

Character 3

(STSL)

Character 4

(MLS)

Character 5

(MLE)

Character 6

(MLR)

Full exemption

5-FullML

  1. “SS”
  2. “SM”
  3. “SI”

Allowed

Not permissible

Allowed

Not permissible

Half exemption

6-HalfML

  1. “SS”
  2. “SM”
  3. “SI”

Allowed

Not permissible

Allowed

Allowed

Custom Tax

8-No TaxC

  1. “SS”
  2. “SM”
  3. “SI”

Allowed

Allowed

Not permissible

Allowed


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How did we do?

STP Phase 2 - Medicare Levy Reduction (No. of Dependants) in Reckon Accounts 2023

ATO Tax Treatment Code Matrix in relation to Reckon Accounts 2023

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STP Phase 2 - STP Tax Category in Reckon Accounts 2023
STP Phase 2 - Income Type in Reckon Accounts 2023
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