Paying Super for Contractors
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 t...
Forum Discussion
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 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.
Hi, Has there been any update from MYOB with regards to the inability of the program to handle contractor super payments? I am in the same boat as you and am experiencing the same issue when attempting to pay super to contractors. Thanks
No response to date from MYOB. Radio silence.........
Given MYOB does not currently support the functionality to correctly pay contractors through their system, nor does it appear that they are the slightest bit interested in addressing this issue, we are paying the super for our contractor seperately through Accounts Payable as a direct contribution to their super fund.
We are in the same boat!
How does this work with being STP compliant?
As our subbies are paid for a mix of labour and materials (we had a ruling years ago that they were true subbies but one new contractor is now saying he is entitled to it. I am awaiting a ruling from the ATO but want to cover ourselves just in case.)
How do you do your PO/ invoice to reflect the component that is subject to super?
Can I just do one Pay run/ or payment for the qtr or do you apply it every pay week?
Cheers
Carmel
