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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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  • 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.

  • Dominik Rinsche commented  ·   ·  Report

    Hi all, I've just come across this discussion having discovered this issue myself in my clients file. Might I assume then XERO haven't fixed this, or has anybody come across a fix / a fix applied to their XERO file?

  • 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).

  • Peter Clarke commented  ·   ·  Report

    Hopefully this will be fixed soon, as the Xero Created BAS doesnt match the ATO ... Do you we adjust the BAS on the ATO side and be out of reconciliation with the STP ? or adjust the Xero BAS to match the STP ? In the meantime i have turned on all the pay items to be W1 .. But this will just push the issue down the track to my employees having their income overstated.

  • Susan Zlatkovic commented  ·   ·  Report

    Agreed. It makes no sense whatsoever to have a box that you can tick to say non-reportable W1 (in the earnings category of the Payroll Settings) if it then still gets reported (incorrectly) to the ATO. Please Xero fix this ASAP!!
    LOADS of charitable organisations including churches have non-reportable earnings as a portion of their wage (this is not a reimbursement - which is currently the only way these earnings can be recorded). Putting these wages (earnings) in as a reimbursement throws out Superannuation and Leave Entitlement for these employees. This is crazy!!!

  • 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.

  • Daniel Field commented  ·   ·  Report

    Agreed. I don't know if I'm missing something, but we've got a bunch of travel allowances that satisfy the ATO rules to be tax exempt. According to ATO guidance at https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll/in-detail/single-touch-payroll-phase-2-employer-reporting-guidelines/reporting-the-amounts-you-have-paid/allowances these should not be shown in STP Finalisation. So I'm struggling with a way to try to delete them, since Xero automatically included them.

    If it's exempt from PAYG and not reportable as W1, then why is Xero pushing it into the reportable Allowances part of STP finalisation?

  • 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.

  • Julie Pike commented  ·   ·  Report

    STP2 Allowances. Not reportable at W1 should push that information through with STP, but it doesn't. Using reimbursements as a work around is not good enough - better syncing is needed.

  • 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.

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