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 traci_vbt,
Thanks for raising this. I can completely understand why this feels confusing. The main thing to separate here is the contractor’s legal/tax treatment versus the label used in the MYOB field. If a contractor is one you’re required to pay super for, MYOB’s current help article says to set them up as an employee for super purposes, set Employment basis to Other (not reported), and set Income type to Labour hire. So yes, I’d agree the term Labour hire can be easy to misread. In this setup, it isn’t saying the person necessarily came from a labour hire agency in the everyday sense. It’s the available MYOB/ATO reporting label used in the product for this contractor-super scenario.
The current MYOB guidance is:
- set the contractor up as an employee as well as a supplier if needed
- set Employment basis to Other (not reported)
- set Income type to Labour hire and TFN to 000 000 000
- create an unscheduled pay with only the super amount and all other values at $0
- then pay it through Pay Super within 7 days of paying the contractor’s invoice
On the broader obligation side, MYOB’s public guidance also notes that some contractors are treated as employees for super purposes under ATO rules, such as where they’re paid mainly for their labour. So a person can still be a contractor generally, but be treated differently for super. Because that part depends on the working arrangement, we’d still recommend confirming the obligation itself with the ATO or a payroll adviser. But once super does apply, the setup above is the current MYOB-supported process.
Regards,
Sai
Hi Isaiah_C
I have just set this up for the first time for our one subcontractor as you outlined above and when I went to submit the pay I got an error that the Payment Basis Code is invalid - which is set as Other (not reported) as you said above. what am I meant to do??? I need to know ASAP.
Thank you.
Hi SharonSL,
That would be confusing when you’re only just getting this started. This error usually means the contractor's Employment basis is set to "Other (not reportable)", which isn't accepted if that contractor needs to be reported through STP.
The quick way to check it is:
-If this contractor should be included in STP, update their Employment basis to a valid reportable option, then try lodging again.
-If they're only being paid super and aren't meant to be reported through STP, "Other (not reportable)" can stay as is and you should be able to continue with the super payment.
Because contractor reporting can vary, it's worth confirming the right treatment with your accountant or the ATO before making any changes.
Regards,
EarlHi Earl,
I know we need to pay super for him - I'm not trying to report through STP - I need to pay super only. Have consulted with our accountant also that this is correct. I've followed MYOB's instructions above and from the link provided in this MYOB thread:
and it gives an error. Your own instructions tell us to pick "Other (not reportable)". I've tried again this morning - see the error in the screenshot - the error for the Pay Run Date is new, I can't see what's wrong with that? Despite the errors I clicked record and it was rejected by the ATO and the super isn't there to pay either.
Please help asap.
Thanks.
Hi SharonSL,
Thanks for explaining that clearly, and for sharing the screenshot. Yes, for a contractor setup like this, the Employment Basis should be set to Other – not reported and the Income Type should be Labour hire. If you’ve already got that set up and you’re still seeing the error, it’ll need a closer look from our team to check that contractor setup properly. Please reach out using one of the support options on our Contact Us page.
As for the other error, this forum thread explains it a bit further and may help with the fix.
Cheers,
Princess
