Tax Exemptions

Question

Hi,

We have a number of employees on LAFHA which food and accomodation should be tax exempt.  When we check in our system (Contract Power) we have this set up correctly, however, it still shows up on the employees payslip as tax deductable.  Please could you advise how this can be fixed.

Thanks

Kirsten

CloverQ · Answer

Hi @KIGRAR

I'm happy to continue to work through this situation via this forum if you would like to provide details of any further questions you may have.

If you would prefer to discuss this matter through a phone call we do recommend contacting our phone based teams.

KIGRAR · Answer

Would it be possible to get someone to call me on Monday regarding this?  It has still not been resolved.

Thanks,

Kirsten

CloverQ · Answer

Hi @KIGRAR

Thank you very much for the screenshots.

The payroll category setting is exempting the LAFHA category from PAYG calculation, please also double check the pay runs/payroll reports to make sure that the PAYG figure is correct in the company file.

With the pay runs recorded correctly, how it reports to ATO is determined by your STP setup. According to this ATO page - 'Living away from home allowance fringe benefits are not reportable as allowances through STP', please do check with your accountant or with ATO to set the correct ATO reporting category.

Another important matter is that the screenshot suggests you are still using STP 1, to stay compliant with the ATO, you need to move to STP Phase 2 before 1 January 2023. Please check out this Help article on Getting ready for STP Phase 2 and make the move as soon as possible.