Payroll Categories - STP and how to set up employer deductions

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Experienced Cover User HeatherM01
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Payroll Categories - STP and how to set up employer deductions

I have an issue with assigning payroll categories to the ATO for STP.

We currently pay certain staff a gross amount and then deduct an employer management fee pre tax.

Our payroll categories are currently set up with the gross payment as a wage category and the fee being a deduction.  However, I have no way of allocating the deduction to gross payments for STP purposes and none of the other categories are relevant. I also can't have it as non-reportable as then the gross payments would feed through to the ATO and this is incorrect as it's not what the staff are actually paid.    


The help screen shows that deductions should be used only for deductions that are made that are sent to a third party and not kept internally. I've looked at setting up a new wage category for these deductions but am unable to do that either as there is nowhere to set the deduction information only wage information.  


Does anyone have any idea how I can set up a employer pre-tax deduction that can be linked to gross payments for STP purposes ? 

MYOB Moderator Stuart_W
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Re: Payroll Categories - STP and how to set up employer deductions

Hi @HeatherM01


I would like to extend to you a very warm welcome to the MYOB Community Forum. I hope you find it a wealth of knowledge.


Under certain conditions a deduction may be non-reportable, for example if it is salary sacrifice, child support or loan car payments. Unfortunately, we cannot change the reporting categories allowed to us as these are set by the ATO, however for specific advice on where this deduction should go please speak to the ATO or a tax professional. For more information on setting reporting categories please see our help note Assign ATO reporting categories for Single Touch Payroll reporting.


While it is technically possible to set up a wage category to act as a deduction, this is not standard use of the software and you would definitely need to speak to the ATO as to the repercussions for reporting this scenario. However, if you were to do this, you would make the wage category a salary type and override the employees wage account with the deduction expense account. You can then set the amount to be deducted in the employee’s standard pay in the card file, and this will now be a wage category acting as a deduction.


Kind Regards,

Stuart W
MYOB Client Support
Trusted Cover User oyster
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Re: Payroll Categories - STP and how to set up employer deductions

Hopefully, this is considered welcome news. 


I raised this same question at a STP workshop and was told that pre-tax deduction will automatically reduce the Gross Payment amount when it's reported to the ATO with each pay run.  This is even if you assigned Not Reportable as the ATO reporting category. There's no need to assign it to Gross Payments like you might have with Payment Summaries. 


That is deduction categories with a tick against PAYG Withholding in the Exempt button. 

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