The Tax Treatment field is a read-only field that is populated based on selections made in the Employee Tax Details and TFN Declaration. An employee's Tax Treatment code is a six-character code that represents a summary of their current tax position. The Tax Treatment is included in STP Reporting events sent to the ATO.
Each character in the code represents a different factor that affects how the employee is taxed e.g. they receive regular SAW payments, are claiming the tax-free threshold, have not provided a TFN, have a Medicare levy variation, etc.
You can hover your mouse pointer over the Tax Treatment label (not the field itself) to see a description of elements in an employee's Tax Treatment code.
Where a position does not apply to the employee, X is reported instead, e.g. RTXXXX is a valid Tax Treatment code.
Position Represents Example:
Position | Represents | Example |
1 | Tax Category | R for regular payments, H for Working Holiday Maker |
2 | Options per Category | T for tax-free threshold claimed, C for Commissioner's instalment rate |
3 | Study and training support loan | S when an employee has an STSL debt |
4 | Medicare Levy surcharge variation | 1, 2 or 3 based on tier level |
5 | Medicare levy exemption | F is reported for full exemption |
6 | Medicare levy reduction | 0 (zero) for spouse only, 1-9 for dependent children |
The list of valid character combinations is extensive. Refer to the following ATO article for more information about tax treatment and individual code characters, as well as lots of other useful information about STP2 - How to report employment and taxation information through STP Phase 2.