Hi Community,

We have a contractor for which we are required to pay super for.  I have set this contractor up as an employee according to the MYOB guidelines.  We processed a zero pay and added the Super Guarantee dollar amount.

In the first instance when we tried to finalize the pay we received the following error:

IncomeStreamTypeCError: A mandatory field has not been completed. (ATO error code CMN.ATO.GEN.XML.04).  

After a little research on forum, there was guidance around needing to set the Income Type which is found under Payroll Details>Taxes>Income Type on the employee card.  

It was suggested s that this should be set to the option of \"Labour Hire\" as there is no option for Contractor.  Not technically correct, as this contractor is not through labour hire.  Anyway, if someone could confirm that this is the option to select?

The other thing we did was to process the contractor payment separately and to update the employee card Payroll Details>Personal Details>Employment basis to \"Other - Not Reported\".

This returned another but different error which was as follows:

PaymentBasisCode Error: Employment Basis code is invalid (ATO error code:CMN.ATO.PAYEVNTEMP.000272)

Again, looking at the community forum, two different options are suggested:

1. Set code as Labour Hire; or
2. Set code as Other - Not Reported.

Option 1 - set as 'labour hire'.  again is not technically correct as contractor is not through Labour Hire and Option 2 means that the payment is not reported to ATO.

ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it.

From what I can see, we have 2 options:

1. Set both Income Type and Employment Basis in MYOB as 'Labour Hire\" (which is not technically correct);or
2. Set Income Type as 'Labour Hire' and Employment Basis as 'Other - Not Reported' (in which case suggests that MYOB software does not support this type of reporting).

Would appreciate any assistance with regards to this.

Many Thanks

Lynne 

Hi Community,

We have a contractor for which we are required to pay super for.  I have set this contractor up as an employee according to the MYOB guidelines.  We processed a zero pay and added the Super Guarantee dollar amount.

In the first instance when we tried to finalize the pay we received the following error:

IncomeStreamTypeCError: A mandatory field has not been completed. (ATO error code CMN.ATO.GEN.XML.04).  

After a little research on forum, there was guidance around needing to set the Income Type which is found under Payroll Details>Taxes>Income Type on the employee card.  

It was suggested s that this should be set to the option of \"Labour Hire\" as there is no option for Contractor.  Not technically correct, as this contractor is not through labour hire.  Anyway, if someone could confirm that this is the option to select?

The other thing we did was to process the contractor payment separately and to update the employee card Payroll Details>Personal Details>Employment basis to \"Other - Not Reported\".

This returned another but different error which was as follows:

PaymentBasisCode Error: Employment Basis code is invalid (ATO error code:CMN.ATO.PAYEVNTEMP.000272)

Again, looking at the community forum, two different options are suggested:

1. Set code as Labour Hire; or
2. Set code as Other - Not Reported.

Option 1 - set as 'labour hire'.  again is not technically correct as contractor is not through Labour Hire and Option 2 means that the payment is not reported to ATO.

ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it.

From what I can see, we have 2 options:

1. Set both Income Type and Employment Basis in MYOB as 'Labour Hire\" (which is not technically correct);or
2. Set Income Type as 'Labour Hire' and Employment Basis as 'Other - Not Reported' (in which case suggests that MYOB software does not support this type of reporting).

Would appreciate any assistance with regards to this.

Many Thanks

Lynne 

We've the same problem here. Consulted the MYOB consultant but no solution was given as apparently non of the options given (Labour hire or Other non reported) can correctly compliant with the ATO requirement for contractor super payment...I hope someone can provide better advise on this.

We've the same problem here. Consulted the MYOB consultant but no solution was given as apparently non of the options given (Labour hire or Other non reported) can correctly compliant with the ATO requirement for contractor super payment...I hope someone can provide better advise on this.

Hi Karma,

No update from MYOB to date.

In an answer to your question, we have adopted the following process in regards to paying super for contractors.

1. Enter Subcontractor Invoice as usual into MYOB as a purchase and code to G/L Account subcontractors
2. Update a running spreadsheet for all invoice amounts for the subcontractors applicable to super
3. At the end of each month subtotal the amount of subcontractor payments subject to Super
4. Create a purchase or spend money in MYOB payable to the superannuation company and allocate to a separate expense a/c in G/L Superannuation - Contractors
5. We use a clearing house for our super payments which has a portal.  We have set up the subcontractors in the portal and update the super payable for at the end of each month
6. Process payment to super clearing house for the monthly super owed to the subcontractors.

Hope that helps.

Cheers

Lynne

Hi Karma,

No update from MYOB to date.

In an answer to your question, we have adopted the following process in regards to paying super for contractors.

1. Enter Subcontractor Invoice as usual into MYOB as a purchase and code to G/L Account subcontractors
2. Update a running spreadsheet for all invoice amounts for the subcontractors applicable to super
3. At the end of each month subtotal the amount of subcontractor payments subject to Super
4. Create a purchase or spend money in MYOB payable to the superannuation company and allocate to a separate expense a/c in G/L Superannuation - Contractors
5. We use a clearing house for our super payments which has a portal.  We have set up the subcontractors in the portal and update the super payable for at the end of each month
6. Process payment to super clearing house for the monthly super owed to the subcontractors.

Hope that helps.

Cheers

Lynne

Thank you Lynne,

So you don't put them through payroll at all?

Also how do you do your purchase orders to work out what is free from Super?

Our Subbies get paid to complete a job, i.e 'construct a fence and hang gates'. This is where the grey area appears in the 'how to tell the difference between a contractor and employee' on the ATO site. They tick every box for a contractor except for the 'primarily for labour'.

The rate they get covers them for the fact they are using their equipment, purchasing some materials, hire of equipment, travel & insurance costs etc. If we were paying a labourer to just turn up and we were supplying everything he would be on a much lower hourly rate. Do you just work out an average percentage that is factored into the price to cover the extras?

How should they be invoicing us? 

I have requested the ATO to give us another ruling and also contacted our accountant but as of yet have heard nothing back from either.

Cheers

Carmel 

Thank you Lynne,

So you don't put them through payroll at all?

Also how do you do your purchase orders to work out what is free from Super?

Our Subbies get paid to complete a job, i.e 'construct a fence and hang gates'. This is where the grey area appears in the 'how to tell the difference between a contractor and employee' on the ATO site. They tick every box for a contractor except for the 'primarily for labour'.

The rate they get covers them for the fact they are using their equipment, purchasing some materials, hire of equipment, travel & insurance costs etc. If we were paying a labourer to just turn up and we were supplying everything he would be on a much lower hourly rate. Do you just work out an average percentage that is factored into the price to cover the extras?

How should they be invoicing us? 

I have requested the ATO to give us another ruling and also contacted our accountant but as of yet have heard nothing back from either.

Cheers

Carmel 

Hi Carmel,

We do not process through MYOB Payroll at all.  Our attempts to process through payroll resulted in an error when updating to ATO STP reporting.  The ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it .  As MYOB does not currently have the functionality to treat this corrrectly it is clear that the MYOB accounting software does not support it.

The contractors we have are paid on the basis of an hourly rate.  Whilst they may utilize their own tools and equipment, they do not provide materials.  They work exclusively for our business and for all intents and purposes, fit the defination of being deemed an employee.  Therefore, in terms of calculating the super applicable it is simply the total of the invoice they provide each week multiplied by the SGL rate for super.

In your case it would seem that you need some guidance from your external Accountant and/or ATO which is sounds like you are in the process of getting.

Hope that helps and good luck with getting clarification on this.

Cheers

Lynne

Hi Carmel,

We do not process through MYOB Payroll at all.  Our attempts to process through payroll resulted in an error when updating to ATO STP reporting.  The ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it .  As MYOB does not currently have the functionality to treat this corrrectly it is clear that the MYOB accounting software does not support it.

The contractors we have are paid on the basis of an hourly rate.  Whilst they may utilize their own tools and equipment, they do not provide materials.  They work exclusively for our business and for all intents and purposes, fit the defination of being deemed an employee.  Therefore, in terms of calculating the super applicable it is simply the total of the invoice they provide each week multiplied by the SGL rate for super.

In your case it would seem that you need some guidance from your external Accountant and/or ATO which is sounds like you are in the process of getting.

Hope that helps and good luck with getting clarification on this.

Cheers

Lynne

I have been paying Contractors super via MYOB STP since the beginning with no problems. 

I have selected Labour Hire as the Employment Basis and Labour Hire as the Income Type.  

It gets reported and lodged via my STP reports along with the employees super because that is what is it. 

Try not to over complicate it people

There should be the option named Contractor.  I know this is not the correct wording as they are not Labour Hire, but this is what MYOB says to do in their instructions and it works. 

I have been paying Contractors super via MYOB STP since the beginning with no problems. 

I have selected Labour Hire as the Employment Basis and Labour Hire as the Income Type.  

It gets reported and lodged via my STP reports along with the employees super because that is what is it. 

Try not to over complicate it people

There should be the option named Contractor.  I know this is not the correct wording as they are not Labour Hire, but this is what MYOB says to do in their instructions and it works. 

That's interesting.... because as per MYOB Moderator's response above they instructed me \"to set your employee's employment basis as \"Other- Not Reported\" and the income type as \"Labour Hire.\"  which I followed and resulted in an error when updated STP reporting each time.

The MYOB instructions on their website as to how to pay super for a contractor actually just states to add them as an employee https://www.myob.com/au/support/myob-business/payroll/superannuation  it does not actually provide guidance to the employment basis or income time.

Good to know that you can set both employment basis and income as Labour Hire and that this actually works.  That was precisely the answer that I was after when I first asked the question (above). However, that was not the answer I received from MYOB moderator.

AGAIN, it would be really helpful if MYOB were transparent and provided clear guidance so as to avoid us all the confusion.

As you said in response above, 

\"Xero does have the option to select \"Contractor\" so we know it can be done.. We do not care what is behind the IT scene but the wording for bookkeepers and Payroll staff should be straight forward and logical. This is just not logical as Labour Hire is NOT the correct wording.

We do not have time to try to figure this stuff out.  Please add the option \"Contractor\" and you(MYOB) can code it as you like in the background. \"

That's interesting.... because as per MYOB Moderator's response above they instructed me \"to set your employee's employment basis as \"Other- Not Reported\" and the income type as \"Labour Hire.\"  which I followed and resulted in an error when updated STP reporting each time.

The MYOB instructions on their website as to how to pay super for a contractor actually just states to add them as an employee https://www.myob.com/au/support/myob-business/payroll/superannuation  it does not actually provide guidance to the employment basis or income time.

Good to know that you can set both employment basis and income as Labour Hire and that this actually works.  That was precisely the answer that I was after when I first asked the question (above). However, that was not the answer I received from MYOB moderator.

AGAIN, it would be really helpful if MYOB were transparent and provided clear guidance so as to avoid us all the confusion.

As you said in response above, 

\"Xero does have the option to select \"Contractor\" so we know it can be done.. We do not care what is behind the IT scene but the wording for bookkeepers and Payroll staff should be straight forward and logical. This is just not logical as Labour Hire is NOT the correct wording.

We do not have time to try to figure this stuff out.  Please add the option \"Contractor\" and you(MYOB) can code it as you like in the background. \"

My problem isn't Superannuation for Contractors but is similar. I need to report them for Payroll Tax purposes and although on the Payroll Tax report there is a space to report Contractor Payments I cannot find how to make the effected Contractors appear on the report, do I need to set them up in the payroll?

My problem isn't Superannuation for Contractors but is similar. I need to report them for Payroll Tax purposes and although on the Payroll Tax report there is a space to report Contractor Payments I cannot find how to make the effected Contractors appear on the report, do I need to set them up in the payroll?

Hi there IllawarraAnn,

To report contractor payments for Payroll Tax purposes, you don't need to set up the contractor in payroll. Instead, follow the steps below\"

\n
• Update Contractor Card: Ensure that on the contractor's card, the \"Report Taxable Payments\" option is ticked. This will include their payments in the taxable payments report.
\n
• Set Preferences: Go to Setup > Preferences > Reports & Forms tab and select the preference \"I Report Taxable Payments Made to Contractors.\"
\n

You can check this link for more information.

Best regards,

Doreen

Hi there ,

To report contractor payments for Payroll Tax purposes, you don't need to set up the contractor in payroll. Instead, follow the steps below\"

\n
• Update Contractor Card: Ensure that on the contractor's card, the \"Report Taxable Payments\" option is ticked. This will include their payments in the taxable payments report.
\n
• Set Preferences: Go to Setup > Preferences > Reports & Forms tab and select the preference \"I Report Taxable Payments Made to Contractors.\"
\n

You can check this link for more information.

Best regards,

Doreen

Hi Doreen

It is my understanding that updating the contractor card to Report Taxable Payments is to facilitate the reporting to ATO as part of the Taxable payments annual report (TPAR).  Not sure how this relates to Payroll Tax?

Hi Doreen

It is my understanding that updating the contractor card to Report Taxable Payments is to facilitate the reporting to ATO as part of the Taxable payments annual report (TPAR).  Not sure how this relates to Payroll Tax?

Hi Lmcstack,

Setting up a contractor as an employee in MYOB for superannuation purposes can be tricky due to the specific requirements of the Australian Taxation Office (ATO). As you mentioned, the errors (CMN.ATO.GEN.XML.04 and CMN.ATO.PAYEVNTEMP.000272) can be resolved by setting your employee's employment basis as \"Other- Not Reported\" and the income type as \"Labour Hire.\" For more details about employment basis, check out this link. I also recommend reaching out to your accountant or the ATO for specific guidance in accurate reporting of tax obligations.

Cheers,

Princess

Hi ,

Setting up a contractor as an employee in MYOB for superannuation purposes can be tricky due to the specific requirements of the Australian Taxation Office (ATO). As you mentioned, the errors (CMN.ATO.GEN.XML.04 and CMN.ATO.PAYEVNTEMP.000272) can be resolved by setting your employee's employment basis as \"Other- Not Reported\" and the income type as \"Labour Hire.\" For more details about employment basis, check out this link. I also recommend reaching out to your accountant or the ATO for specific guidance in accurate reporting of tax obligations.

Cheers,

Princess

Hi Princess

Thanks for responding.

The ATO guidelines are clear \"super contributions to contractors are to be reported Via STP2 if the accounting software can support it\".

The problem is MYOB does not support this.

The workaround that MYOB recommend is:

1.  set the Income Type to 'Labour Hire' as there is no option for Contractor (found under Payroll Details>Taxes>Income Type on the employee card).  As stated previously this is not correct as an independent contractor is NOT Labour Hire.  

2.  update the employee card Payroll Details>Personal Details>Employment basis to \"Other - Not Reported\".  In which case, the the payment of super to the contractor IS NOT REPORTED to ATO.  

The only benefit in actually setting it up this way is so that you can record the payment through MYOB together will all other super payments.  It is not reported to ATO as super under STP.

Let's be clear here, MYOB software DOES NOT CURRENTLY have the capability to correctly report super contributions to contractors Via STP2.  Once again we are left to figure out some sort of work around to the MYOB.   Instead of MYOB acknowledging this,  they attempt to deflect and defer to the ATO and our external Accountants.

Just like previous issues raised re. Payroll - All Purpose Allowances, MYOB is still yet to rectify this.

Hi Princess

Thanks for responding.

The ATO guidelines are clear \"super contributions to contractors are to be reported Via STP2 if the accounting software can support it\".

The problem is MYOB does not support this.

The workaround that MYOB recommend is:

1.  set the Income Type to 'Labour Hire' as there is no option for Contractor (found under Payroll Details>Taxes>Income Type on the employee card).  As stated previously this is not correct as an independent contractor is NOT Labour Hire.  

2.  update the employee card Payroll Details>Personal Details>Employment basis to \"Other - Not Reported\".  In which case, the the payment of super to the contractor IS NOT REPORTED to ATO.  

The only benefit in actually setting it up this way is so that you can record the payment through MYOB together will all other super payments.  It is not reported to ATO as super under STP.

Let's be clear here, MYOB software DOES NOT CURRENTLY have the capability to correctly report super contributions to contractors Via STP2.  Once again we are left to figure out some sort of work around to the MYOB.   Instead of MYOB acknowledging this,  they attempt to deflect and defer to the ATO and our external Accountants.

Just like previous issues raised re. Payroll - All Purpose Allowances, MYOB is still yet to rectify this.

This is a great explanation

What MYOB should do, is as you said - own it and be transparent with us to avoid confusion. 

Xero does have the option to select \"Contractor\" so we know it can be done.. We do not care what is behind the IT scene but the wording for bookkeepers and Payroll staff should be straight forward and logical. This is just not logical as Labour Hire is NOT the correct wording.

We do not have time to try to figure this stuff out.  Please add the option \"Contractor\" and you(MYOB) can code it as you like in the background. 

This is a great explanation

What MYOB should do, is as you said - own it and be transparent with us to avoid confusion. 

Xero does have the option to select \"Contractor\" so we know it can be done.. We do not care what is behind the IT scene but the wording for bookkeepers and Payroll staff should be straight forward and logical. This is just not logical as Labour Hire is NOT the correct wording.

We do not have time to try to figure this stuff out.  Please add the option \"Contractor\" and you(MYOB) can code it as you like in the background.