Deduction categories: classification options defined

When reporting employee earnings to the ATO (whether via a payment summary annual report or through STP), certain deductions must be assigned to specific classifications so they are itemised as per ATO specifications. Instructions on how to map a classification to a deduction category can be found here.

This article will focus on defining each deduction classification, as follows:

• Child support deduction: This is a deduction made under a notice as per section 45 of the Child Support (Registration and Collection) Act 1988. Select this classification only if you are reporting via STP and want an employee's child support deduction amount to be reported via STP every pay run, in lieu of providing a separate declaration to the Child Support Registrar. To be clear, if you are reporting via STP but prefer to manually send monthly reports to the Child Support Registrar then do not assign this classification - rather you would assign the "Default" classification. Additionally, take note that these deduction amounts will only begin being reported through STP upon the commencement of STP Phase 2 reporting, being 1 January 2022. 
• Child support garnishee: This is a deduction made under a notice as per section 72A of the Child Support (Registration and Collection) Act 1988. Select this classification only if you are reporting via STP and want an employee's child support garnishee amount to be reported via STP every pay run, in lieu of providing a separate declaration to the Child Support Registrar. To be clear, if you are reporting via STP but prefer to manually send monthly reports to the Child Support Registrar then do not assign this classification - rather you would assign the "Default" classification. Additionally, take note that these deduction amounts will only begin being reported through STP upon the commencement of STP Phase 2 reporting, being 1 January 2022. 
• Salary sacrifice (other employee benefits): This refers to an effective salary sacrifice arrangement, entered into before the work is performed, for benefits other than for superannuation, where the sacrificed salary is permanently foregone. Examples include novated lease, gym membership, etc.
• Salary sacrifice (superannuation): This refers to an effective salary sacrifice arrangement, entered into before the work is performed, where contributions are paid to a complying superannuation fund, whereby the sacrificed salary is permanently foregone.
• Union or professional association fees: Any amounts paid as union fees, subscriptions to trade, business or professional associations, bargaining agent's fees to a union for negotiations in relation to a new enterprise agreement/award on behalf of your employees.
• Workplace giving: Any workplace giving program donation amounts paid to charities or organisations that are entitled to receive tax deductible donations. Refer to the ATO website for  further information on how workplace giving donations should be deducted from an employee's pay.

If none of the above options describe the intended use of the deduction category, the "Default" classification should be selected.

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