One of the new STP Phase 2 requirements is to report on the employment basis of each individual. Further to the information provided in our Phase 2 overview article, reporting this data becomes critical in providing context to the changes in the financial amounts for each STP event for government agencies using this data. For example, the change of employment circumstances may assist the ATO to better assess the correctness of PAYG amounts being withheld for a casual employee that has multiple employers, so as to potentially avoid a tax debt at the end of the financial year. For Services Australia, the change of employment circumstances may assist to determine eligibility for government programs and services as well as benefits and payments.
The employment basis is the equivalent of the 'employment type' field located in the employee's Tax File Declaration screen. The definition of each valid option currently supported in the payroll platform is as follows:
- Full Time: a person who is engaged for the full ordinary hours of work as agreed between the employer and employee and/or set by an award, registered agreement or other engagement arrangement. A full time employee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
- Part Time: a person who is engaged for less than the full ordinary hours of work, as agreed between the employer and employee and/or set by an award, registered agreement or other engagement arrangement. A part time employee has an expectation of continuity of the employment or engagement on either an ongoing or fixed term basis.
- Casual: a person who does not have a firm commitment in advance from an employer about how long they will be employed or engaged, or for the days or hours they will work. A casual employee also does not commit to all work an employer may offer. A casual employee has no expectation of continuity of the employment or engagement.
- Labour Hire: a contractor who has been engaged by an employer to work for their client. The hours of work and duration of engagement are not factors for consideration. This will include contractors who have provided a voluntary agreement with a payer that arranges for persons to perform work or services, or performances, directly for clients of the entity.
- Non-Employee (Superannuation only): a payee who is not in scope of STP for payments but may be included in STP for voluntary reporting of superannuation liabilities only. Assign the employment type 'Superannuation Income Stream' to any employee that meets this definition. The payee's ABN will then need to be specified in the Contractor ABN field. Also, the STP tax category for the payee will need to be configured as ATO defined > Non-employee.
The definition of each valid option NOT currently supported in the payroll platform is as follows:
- Death Beneficiary: the recipient of an ETP death beneficiary payment who is either a dependant, non-dependant or trustee of the estate of the deceased employee. This option must only be used if the death beneficiary is not already an existing employee. If the beneficiary is an existing employee, then one of the above valid options should be assigned to the beneficiary instead. Death benefits functionality will be catered for and made available to users from early 2022.
- Voluntary Agreement: a contractor with their own ABN and is an individual person, rather than a business. The hours of work and duration of engagement are not factors for consideration. There are no immediate plans to cater for independent contractors. This means this employment type option will not be catered for in the platform in the short to medium term.
If you have any questions or feedback, please contact us on support@yourpayroll.com.au.