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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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Gaining Support  ·  AdminDavid Reynolds (Admin, Xero) responded  · 

Hi everyone, thanks for your continued feedback. To be upfront, we do not have any planned work to change how non-reportable allowances are processed at this stage. Currently, you need to use a reimbursement pay item to process these allowances. Our product team has confirmed that this remains a compliant solution with the ATO.

However, we hear you. We know that relying on reimbursements involves workflow challenges. While it's not on our immediate roadmap, we will continue to monitor your feedback and will update this thread if anything changes.

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  • Lea Maher commented  ·   ·  Report

    Hi David,
    To be equally upfront - this is completely unacceptable and extremely poor. Your only concern seems to be the ATO requirements - however you seem unaware or indifferent to the fact that Total Earnings on the payslip are misstated by not including the non-reportable allowances. The ATO should not be the primary driver here. Xero is supposed to be accounting software but your only concern seems to be tax compliance. This is just plain wrong and I would have thought embarrassing for Xero as Xero do not seem to grasp the basic concepts here.
    I'm staggered that something which would be such an easy fix has been ignored. It is extremely frustrating and reflects very poorly on Xero.

  • Tracey Patrick commented  ·   ·  Report

    This is a very frustrating limitation that has been ongoing for quite a while. Would really love to see this fixed

  • David Whitehouse commented  ·   ·  Report

    If an Allowance Type MUST be reported on STP it doesn't make sense that the item in the payroll item setup allows you to untick the "Reportable as W1 on Activity Statement" .

    This creates contradictory reporting between the BAS report and the STP submission.

    The attached reports (BAS and STP) show a $2,806.00 discrepancy because an STP mandatory TYPE of allowance had "Reportable as W1 on Activity Statement" unticked

  • Tracey Lougher commented  ·   ·  Report

    This is disappointing. At the moment we are required to manually revise each payroll individually, which is extremely time‑consuming. I’m hoping a permanent rectification can be implemented ahead of the 27/28 financial year.

  • Tracey Lougher commented  ·   ·  Report

    this needs to be actioned asap for accuracy on employee payslips and tax reporting.

  • 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?

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