If there is one thing that will screw up your payroll it will be Allowances. Mis-categorising allowances will cause employee tax assessment and balancing issues.

Different types of allowances are subject to Pay as you go (PAYG) withholding . You only record allowances that are not required to and may / or may not be included in the Gross payments for the payeeOTE (Ordinary Time Earnings) for the purposes of Superannuation.

STP specifies those allowances requiring separate identification & reporting. Refer to the table at the bottom of this document for details.

Allowance amount

This For STP this is the year to date amount for the specific allowance type. Amounts recorded here are not included in Gross payments. Any PAYGW amounts withheld from allowances is to be aggregated into the PAYGW amount recorded against an income type. If no other gross income is recorded, use the INB PAYGW amount and record zero for the gross amount fields.

Allowances are now reported directly to the ATO via Single Touch Payroll. Whilst their tax treatment hasn't changed, the reporting has, as per the tables below.

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If in doubt ASK YOUR ACCOUNTANT, have a look at these two examples!

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Example 1

Car (Table 2) - work related travel only

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• The Car allowance is Taxed (Y), it does not get included in the Super calculations (N), and it appears separately for PAYG (Y), under ATO code 'Car'. It isn't included in their Gross.
• Living Away Allowance is Taxed (Y), isn't used for Super (N) and also appears separately for PAYG purposes (Y), under ATO code 'Travel'. Not included in their Gross.
• Tool Allowance is Taxed (Y), again isn't used for Super (N), appears seperately for PAYG (Y), under ATO Code 'Other". In this case the allowance title (Tools) will also be sent to the ATO. Not included in their Gross.
• Note allowances 1-4 will check if a description is set on the employee master record.

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Example 2

Car (Table 1) - includes non-work related travel

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Now the allowances in Minder look like:-

So in this case, the 'Car Allowance' is not an allowance at all, it is just part of their Gross Salary.

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ATO Allowances Table

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