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AU Payroll - Option to select non reportable allowance

Could Xero start looking at a drop down box on the allowance to have one as Not Reportable (alongside the other catagories eg. Meals, Tools, Car), and to have it out for STP reporting? or another checkbox down the bottom along with the withholding tax, super, and W1 questions?
Instead of going through the long winding process of creating an ordinary earning, remove as deduction and do a reimbursement as per https://central.xero.com/s/article/Process-special-pay-items-like-living-away-from-home-allowance

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Sharlin Tan shared this idea  ·   ·  Report…  ·  Admin →
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  • John Lewis commented  ·   ·  Report

    We've been making allowances for Xero for too long 😝

  • Suzanne Brown commented  ·   ·  Report

    Agree with Pru.
    When STP started pre-filling the BAS W1 and W2, I was confused why pay items that were marked "not reportable at W1" were being included.
    I have spent a long time fixing allowances that have been reported when they shouldn't have been.

  • Pru Hall commented  ·   ·  Report

    There are some things which don't need to be reported through STP because there are special rules about reporting them.

    If "not reportable at W1" is being selected then it there is no need to report it to the ATO.

    Why is it being reported?

  • Petra Austing commented  ·   ·  Report

    Agreed - would love some action on this. Really essential now

  • Nicole Navratil commented  ·   ·  Report

    this is essential to have fixed in prep for EOPY and STP Finalisation. In particular with ATO data matching now.

  • Justine Turner Day commented  ·   ·  Report

    Further on this topic - the reimbursement work around is just not correct....and means then that the employer has to explain to the employee that on their payslip where it says reimbursement it is not really a reimbursement it is their allowance - but the Xero software doesnt work if its used as an allowance when the business reports the end of year earnings.....how embarrassing for Xero and the business and confusing for the employee.....when many dont understand their payslip in the first instance!

  • Justine Turner Day commented  ·   ·  Report

    This is something that is essential for STP finalisation for 2025. I can see that it has been an ongoing issue for a number of years and really does need addressing immediately with a fix in place for end of 2025.
    As a bookkeeping practice, we can work around this, with more time and effort, however small business who do their own bookkeeping rely on the software aka Xero providing the solution without them having to be a technician. Just because this may not have as many votes (likely because many people are not aware of it being a major technical glitch at the end of the year) - when it comes to compliance - common sense needs to apply in relation to when something is an urgent fix so that Xero customers CAN rely on the software doing what it is meant to do. If the ATO pick this up and start auditing business', a glitch in the Xero software is not likely to be something that the ATO will accept as a reason for the error.

  • Kylie Thompson commented  ·   ·  Report

    Agree - This is essential to have fixed in prep for EOPY and STP Finalisation. In particular with ATO data matching now.

  • Paula Wyeth commented  ·   ·  Report

    It is important, Xero's new instructions indicate to just treat as a reimbursement.
    https://central.xero.com/s/article/Add-a-custom-pay-item

    Below is from the link, incase the link breaks in the future.

    Reimbursements

    Out-of-pocket or other expenses you reimburse employees for, such as tool allowances, mileage expenses, travel allowances or non-reportable allowances.

    Some non-reportable amounts are:

    Living away from home allowance (LAFHA) fringe benefit
    Travel allowance equal to or below the ATO’s reasonable amount
    Overtime meal allowance below the ATO’s reasonable amount
    Post tax deductions, except for those you need to separately identify
    To determine whether an amount is non-reportable, use the guide to paying allowances (ATO website).

  • Lisa Height commented  ·   ·  Report

    Completely agree - this process just doesnt seem to make sense from the employers or the employees point of view. You also cant put units or rates against reimbursements meaning manual calculations, unclear reporting and room for error.

  • Tanya Meldrum commented  ·   ·  Report

    I agree. Creating a non-reportable allowance through a reimbursement item is just not correct. And of course, it shows up in the reimbursements section of the payslip. No, just no.

  • Denise Waechter commented  ·   ·  Report

    It would good for xero to have a non-reportable Allowance Option. Using reimbursements is definitely against the grain of what the ATO say a reimbursement is. Reimbursements require receipts to substantiate the payment.

  • Lissa Burton commented  ·   ·  Report

    I strongly agree, you need an easily pick non-reportable in the payroll categories. Processing a non-reportable allowance as a reimbursement seems totally wrong.

  • Julie Slade commented  ·   ·  Report

    Pay an Employee for a pay item that won't appear on their income statement and isn't included for STP. eg The Overnight Travel Allowance equal to or below the ATO reasonable amount. Can't it be set up as an pay item with a box to check - Do not include in Income Statement. Having to process this as a reimbursement means having to calculate the amount to be paid for each pay run.