STP Phase 2 introduces a greater level of granularity around reporting of payments. Paid leave is a particular area where there are complex rules around how a payment must be categorised for the purpose of reporting to the ATO.
In this article we will look at the STP reporting rules for paid leave and how you should configure FastTrack360 to ensure that you comply with the rules.
What are the requirements for reporting paid leave under STP Phase 2?
Under STP Phase 2 reporting requirements, payments made to Individual Non Business payees for leave taken, leave paid out during employment and leave paid out at termination of employment must be reported as year-to-date amounts that are disaggregated from other gross payments. The disaggregated amounts are reported under one of the following categories depending on the type of leave that is paid and the circumstances under which the payment is made:
Paid leave type P - applies to paid parental leave including Government Paid Parental Leave (GPPL) payments from Services Australia that are paid to the payee through payroll. Also applies to parental leave that is paid directly by the employer.
Paid leave type W - applies to Workers' compensation leave.
Paid leave type A - applies to ancillary leave such as leave taken for Australian Defense Force service, jury service, eligible community service, emergency service.
Paid leave type O - applies to all other leave types covered by the ruling SGR 2009/2 S32, 33, such as annual leave/annual leave loading, personal leave, rostered day off (RDO) leave, time off in lieu (TOIL), compassionate/bereavement leave, study leave and paid leave granted by an employer in response to specific circumstances.
Paid leave type C - applies to the following leave types when paid out during employment:
annual leave
annual leave loading (except where the applicable award/pay agreement stipulates that the leave loading is paid in compensation for loss of ability to work overtime)
personal/carers' leave
rostered day off (RDO)
long service leave.
Paid leave type U - applies to the following types of leave when paid out as a gross payment at termination of employment:
annual leave
annual leave loading
long service leave.
Overtime - applies to the following types of leave when paid out during service:
annual leave loading (only where the applicable award/pay agreement stipulates that the leave loading is paid in compensation for loss of ability to work overtime)
time off in lieu (TOIL).
In addition to the above, some leave types must be reported as a Lump Sum A, Lump Sum B or as part of an employment termination (ETP) payment when leave is paid out on termination of employment.
At termination of employment, annual leave and annual leave loading …
The reporting of leave payments by type applies to payees with a payee type/income type of Individual Non Business. For payees with a payee type/income type of Labour Hire, leave payments are reported as part of the payees' overall gross earnings amount rather than separately by type.
How does FastTrack360 recognise the type of leave being paid?
When leave taken is paid automatically at the Leave Payments pay batch stage
The Paid Leave Type field in the header of the Leave > Maintenance > Leave Type > Edit Leave Type screen, which is highlighted in the example below, defines how a leave payment, which is linked to the leave type, will be classified in STP reporting when leave taken is paid automatically in a pay batch.
For example, …
an approved leave request linked to the leave type
an absence item, linked to the leave type, on an approved timesheet.
Leave type maintenance in the FastTrack360 Leave module will be enhanced so that any leave type that is assigned to the country of Australia will feature the ability to select, in the header of the leave type record, the paid leave type (P, W, A or O) to which that leave type record corresponds.
In the Payroll module, when leave taken is paid or when the balance of leave is cashed out at the Leave Payment pay batch stage, or when the balance of leave is paid out as a gross payment at the Termination pay batch stage, FastTrack360 will be able to report the corresponding amount under the necessary category depending on the paid leave type that is flagged in the header of the corresponding leave type.
For some leave types, the pay code type that is used to cash out leave in service will also determine how the payment is reported. For more information, see Annual Leave Loading and TOIL below.
Leave paid out at the Termination pay batch stage as a Lump Sum A or Lump Sum B or as part of an ETP will continue to be reported as such, as per current functionality.
What are the specific payment/reporting rules for each leave type?
The sections below describe in detail how each type of paid leave is required to be reported under STP Phase 2 depending on whether the leave is paid when taken, paid when cashed out in service or paid when paid out on termination of employment.
In each case, the leave configuration that is required in FastTrack360 to ensure that the leave payments are reported correctly is identified as is the process for making each type of leave payment in FastTrack360.
With the exception of the ability to identify the paid leave type in the header of a leave type record, which is functionality that will be added to a future release of FastTrack360 in advance of the commencement of STP Phase 2 reporting, most of the leave types that have configured in your system may already adhere to the configuration that is required for each leave type to facilitate correct reporting under STP Phase 2. However, it is recommended that you check your current configuration against what is described below to ensure that leave payments will be reported as required.
The process for making each type of leave payment in FastTrack360 will not change and is provided for context only.
Annual Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered manually at the Leave Payments pay batch stage. |
| Must be reported as Paid Leave - Type C |
Payout at Termination of Employment | ||
Manually triggered as payment type of Gross at Termination pay batch stage. This only applies to unused annual leave that is paid out as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes) and has accrued since 17/08/1993. |
| Must be reported as Paid Leave - Type U |
Manually Triggered as payment type Lump Sum A - Type R at Termination Pay batch stage. This only applies to unused annual leave that is paid out as part of a genuine redundancy, invalidity or early retirement scheme. |
| Must be reported as Lump Sum A (Type R). |
Manually Triggered as payment type Lump Sum A - Type T at Termination Pay batch stage. This only applies to unused annual leave that is paid out as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes) and has accrued before 17/08/1993. |
| Must be reported as Lump Sum A (Type T). |
Annual Leave Loading
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage when annual leave is paid, if annual leave is configured with a leave loading, based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered automatically when a cash out of annual leave is manually triggered at the Leave Payments pay batch stage. |
| If paid against pay code type of Overtime, must be reported as Overtime. Otherwise, must be reported as Paid Leave - Type C |
Payout at Termination of Employment | ||
Manually triggered as payment type of Gross at Termination pay batch stage. This only applies to unused annual leave loading that is paid out as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes) and has accrued since 17/08/1993. |
| Must be reported as Paid Leave - Type U |
Manually Triggered as payment type Lump Sum A - Type R at Termination Pay batch stage. This only applies to unused annual leave loading that is paid out as part of a genuine redundancy, invalidity or early retirement scheme. |
| Must be reported as Lump Sum A (Type R). |
Manually Triggered as payment type Lump Sum A - Type T at Termination Pay batch stage. This only applies to unused annual leave loading that is paid out as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes) and has accrued before 16/08/1993. |
| Must be reported as Lump Sum A (Type T). |
Personal/Carers' Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered manually at the Leave Payments pay batch stage. This leave type can only be cashed out in service under some awards/agreements. |
| Must be reported as Paid Leave - Type C |
Payout at Termination of Employment | ||
Must be manually added to the ETP amount at the Termination pay batch stage. |
| Must be reported as ETP |
Rostered Day Off (RDO) Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered manually at the Leave Payments pay batch stage. |
| Must be reported as Paid Leave - Type C |
Payout at Termination of Employment | ||
Must be manually included in the ETP amount. |
| Must be reported as ETP |
Time Off In Lieu (TOIL) Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered manually at the Leave Payments pay batch stage. |
| Must be reported as Overtime. |
Payout at Termination of Employment | ||
Must be manually included in the ETP amount. |
| Must be reported as ETP |
Compassionate/Bereavement Leave, Study Leave, Employer Special Circumstances Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
N/A - these leave types cannot be cashed out in service. | ||
Payout at Termination of Employment | ||
N/A - these leave types cannot be paid out on termination of employment. | ||
Paid Parental Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type P |
Cash Out of Leave in Service | ||
N/A - this leave type cannot be cashed out in service. | ||
Payout at Termination of Employment | ||
N/A - this leave type cannot be paid out on termination of employment. | ||
Workers' Compensation Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type W |
Cash Out of Leave in Service | ||
N/A - this leave type cannot be cashed out in service. | ||
Payout at Termination of Employment | ||
N/A - this leave type cannot be paid out on termination of employment. | ||
Defense Force Leave, Jury Duty Leave, Community Service Leave (SES ,CFA etc.)
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type A |
Cash Out of Leave in Service | ||
N/A - these leave types cannot be cashed out in service. | ||
Payout at Termination of Employment | ||
N/A - these leave types cannot be paid out on termination of employment. | ||
Long Service Leave
Leave Taken | ||
|---|---|---|
How It's Paid in FastTrack360 Pay Module | Leave Configuration Required in FastTrack360 | STP Reporting Rules |
Paid automatically at the Leave Payments pay batch stage based on either of the following:
|
| Must be reported as Paid Leave - Type O |
Cash Out of Leave in Service | ||
Triggered manually at the Leave Payments pay batch stage. |
| Must be reported as Paid Leave - Type C |
Payout at Termination of Employment | ||
Manually triggered as payment type of Gross at Termination pay batch stage. This applies to long service leave accrued since 16/08/1993 that is paid as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes). |
| Must be reported as Paid Leave - Type U |
Manually Triggered as payment type Lump Sum A - Type R at Termination Pay batch stage. This only applies to unused long service leave that accrued since 16/08/1978 and is paid out as part of a genuine redundancy, invalidity or early retirement scheme. |
| Must be reported as Lump Sum A (Type R) |
Manually Triggered as payment type Lump Sum A - Type T at Termination Pay batch stage. This only applies to unused long service leave that is paid out as part of a normal termination (i.e. reason for termination is not genuine redundancy, invalidity or early retirement schemes) and has accrued between 16/08/1978 and 16/08/1993. |
| Must be reported as Lump Sum A (Type T) |
Manually triggered as payment type of Lump Sum B at Termination pay batch stage. This applies to long service leave accrued before August 1978. |
| Must be reported as Lump Sum B |