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'AU Payroll - Allowances not reportable as W1 to be included in STP filings' has been merged into this idea

Payroll & expenses: Payroll

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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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  • Julie Pike commented  ·   ·  Report

    Glad you have combined an idea - when will this vital issue be fixed??

  • Stacey Swartz commented  ·   ·  Report

    Spot on, I have just had an employee do their income tax return and this has caused major issues and created a tax debt because of how the prefilling reports come across and how it flows through.

  • Lea Maher commented  ·   ·  Report

    Exactly Suzanne - they spend too much time on the flashy glitzy new features to attract new customers and can't find time to fix the dull (but essential) basics for their existing customers...it's very, very, disappointing...particularly when it should actually be quite an easy fix for them

  • Suzanne Brown commented  ·   ·  Report

    Lea, they are too busy 'fixing things' that aren't even broken like menu design and layouts..

  • Lea Maher commented  ·   ·  Report

    When is this issue going to be fixed? We raised it months ago with Xero and were assured it was on their list...
    The way it works currently is completely incorrect.

  • Sharon Davis commented  ·   ·  Report

    This absolutely needs to be done. I was wrongly under the impression that by deselecting not reportable at W1 it would not be reported through STP.... Not the case it would seem. I also don't believe processing it as a re-imbursement is the correct way to go about it. I am assured it is still ATO compliant by doing it as a re-imbursement, but I am not sure how, when as an allowance we do not require receipts!

  • Ben Quast commented  ·   ·  Report

    it's ridiculous that this is still not a feature - either meet all the ATO requirements for STP Phase 2 or don't provide payroll at all

  • Lea Maher commented  ·   ·  Report

    Our company agrees very strongly that these non reportable allowances (in our case meal allowances) should be shown as salary on payslips (despite being non reportable for STP purposes) rather than shown as a reimbursement (which is completely incorrect).

  • Melissa Watson commented  ·   ·  Report

    I am also experiencing this issue and would like to be updated on an answer from Xero for when it will be fixed. Currently, I am correcting the Activity Statement (not using the pre-filled ATO amounts) but it is not good that the Xero STP reconciliation does not match the ATO!

  • 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.

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