STP2 Step 3 - Deductions
Deduction Maintenance Screen Changes
Prior to STP2, the Deduction Maintenance Screen looked like this:
With STP2 enabled, the screen changes to look like this:
1. Identifying Deductions that are not STP2 Compliant
The Deduction List will show any Deduction that is not STP2 Compliant in red font.
2. Deduction Types
STP2 introduces the Deduction Type. To some extent this was handled under STP1 by the "PAYG Summary Section" field.
However under STP2, new codes have been introduced and Eclipse Payroll requires that you now set the Deduction Type for each Deduction.
3. PAYG Summary Section
This field is not required for STP2. It is shown only for reference.
Deduction Type Definitions
Fees (F)
Union fees, subscriptions to trade, business or professional associations, the payment of a bargaining agent’s fee to a union for negotiations in relation to a new enterprise agreement award with the existing payer
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Workplace Giving (W)
Workplace giving program donations to charities or organisations that are entitled to receive tax deductible donations.
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Child Support Garnishee (G)
Deduction made under a notice as per section 72A of the Child Support (Registration and Collection) Act 1988. This is a percentage of a payee’s taxable gross income, a lump sum or a fixed amount each pay until the debt is satisfied.
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Child Support Deduction (D)
Deduction made under a notice as per section 45 of the Child Support (Registration and Collection) Act 1988. This is a fixed dollar amount each pay period. Deductions made under section 45 of the Child Support (Registration and Collection) Act 1988 are made subject to a Protected Earnings Amount (PEA).
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Salary Sacrifice (S)
A general Salary Sacrifice. This does NOT include Salary Sacrifices to Superannuation (which are covered by a separate Deduction Type below).
- PAYGW: This Deduction applies before-tax. You may need to pay tax through some other mechanism such as FBT.
- SGC: This Deduction may relate to OTE and SGC may apply.
Personal Contribution to Superannuation (R)
A Deduction that is used to make a variable contribution to Personal Superannuation. This can be configured as both a before-tax (concessional) contribution (Salary Sacrificed) or as an after-tax (non-concessional) contribution.
- PAYGW: This Deduction is used to manage voluntary contributions for Super, either before or after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Other (O)
A Deduction for some other reason not covered by the other Deduction Types available.
- PAYGW: This Deduction is used to manage voluntary contributions for Super, either before or after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
What needs to change in the Deductions for STP2
Choose the correct Deduction Type.
Make sure the Pay Tax and Pay Compulsory Super flags are set appropriately for the allowance.
Save your Deduction and confirm that the Deduction no longer shows in a red font in the Deduction List. This means that the Deduction is STP2 Compliant.
Changes made to Deductions are propagated to Employees
When you change an Deduction, if there are any Grades or Employees referencing the Deduction, note that the new configuration for the Deduction will be propagated to the Grade and/or Employee setup.
This happens when you Save the Deduction Setup. At that point if there are Employees or Grades referencing the Leave you will be presented with the following dialog requesting that you confirm how the propagation of Deduction settings occurs.
Tax and OTE settings are ALWAYS propagated. These settings cannot be overridden at Employee or Grade level.
All other settings are changeable at the Grade or Employee level and you can set whether or not to propagate the Deduction settings so they overwrite the value at Grade/Employee level.
Deduction Templates
Deduction Templates can be accessed from the main menu bar. Templates allow you to quickly set up a new Deduction of a specific Type.
Links
Training video for Salary Sacrifices
Back to STP2 Step 2 - Allowances
ATO Single-Touch-Payroll-Phase-2-employer-reporting-guidelines
Deduction Maintenance Screen Changes
Prior to STP2, the Deduction Maintenance Screen looked like this:
With STP2 enabled, the screen changes to look like this:
1. Identifying Deductions that are not STP2 Compliant
The Deduction List will show any Deduction that is not STP2 Compliant in red font.
2. Deduction Types
STP2 introduces the Deduction Type. To some extent this was handled under STP1 by the "PAYG Summary Section" field.
However under STP2, new codes have been introduced and Eclipse Payroll requires that you now set the Deduction Type for each Deduction.
3. PAYG Summary Section
This field is not required for STP2. It is shown only for reference.
Deduction Type Definitions
Fees (F)
Union fees, subscriptions to trade, business or professional associations, the payment of a bargaining agent’s fee to a union for negotiations in relation to a new enterprise agreement award with the existing payer
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Workplace Giving (W)
Workplace giving program donations to charities or organisations that are entitled to receive tax deductible donations.
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Child Support Garnishee (G)
Deduction made under a notice as per section 72A of the Child Support (Registration and Collection) Act 1988. This is a percentage of a payee’s taxable gross income, a lump sum or a fixed amount each pay until the debt is satisfied.
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Child Support Deduction (D)
Deduction made under a notice as per section 45 of the Child Support (Registration and Collection) Act 1988. This is a fixed dollar amount each pay period. Deductions made under section 45 of the Child Support (Registration and Collection) Act 1988 are made subject to a Protected Earnings Amount (PEA).
- PAYGW: This Deduction applies after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Salary Sacrifice (S)
A general Salary Sacrifice. This does NOT include Salary Sacrifices to Superannuation (which are covered by a separate Deduction Type below).
- PAYGW: This Deduction applies before-tax. You may need to pay tax through some other mechanism such as FBT.
- SGC: This Deduction may relate to OTE and SGC may apply.
Personal Contribution to Superannuation (R)
A Deduction that is used to make a variable contribution to Personal Superannuation. This can be configured as both a before-tax (concessional) contribution (Salary Sacrificed) or as an after-tax (non-concessional) contribution.
- PAYGW: This Deduction is used to manage voluntary contributions for Super, either before or after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
Other (O)
A Deduction for some other reason not covered by the other Deduction Types available.
- PAYGW: This Deduction is used to manage voluntary contributions for Super, either before or after-tax.
- SGC: This Deduction is applied after OTE is calculated. SGC applies.
What needs to change in the Deductions for STP2
Choose the correct Deduction Type.
Make sure the Pay Tax and Pay Compulsory Super flags are set appropriately for the allowance.
Save your Deduction and confirm that the Deduction no longer shows in a red font in the Deduction List. This means that the Deduction is STP2 Compliant.
Changes made to Deductions are propagated to Employees
When you change an Deduction, if there are any Grades or Employees referencing the Deduction, note that the new configuration for the Deduction will be propagated to the Grade and/or Employee setup.
This happens when you Save the Deduction Setup. At that point if there are Employees or Grades referencing the Leave you will be presented with the following dialog requesting that you confirm how the propagation of Deduction settings occurs.
Tax and OTE settings are ALWAYS propagated. These settings cannot be overridden at Employee or Grade level.
All other settings are changeable at the Grade or Employee level and you can set whether or not to propagate the Deduction settings so they overwrite the value at Grade/Employee level.
Deduction Templates
Deduction Templates can be accessed from the main menu bar. Templates allow you to quickly set up a new Deduction of a specific Type.
Links
Training video for Salary Sacrifices
Back to STP2 Step 2 - Allowances
ATO Single-Touch-Payroll-Phase-2-employer-reporting-guidelines