What Is an STP Income Stream and How Do I Set It Up for STP Phase 2?

An STP income stream (also called an income type) is the category that describes the nature of an employee's engagement. Lightning Payroll reports one of four ATO-approved income streams for each employee, and the correct stream must be set before processing pays so that STP Phase 2 submissions are accurate.

The Four Income Streams

1. Salary & Wages ÔÇö the default for most employees. No extra configuration is required.
2. Closely Held Payee ÔÇö for owners, directors, or family members who are closely related to the employing entity.
3. Working Holiday Maker ÔÇö for employees on a working holiday visa who are taxed under the working holiday tax scale.
4. Voluntary Agreement ÔÇö for contractors paid under a voluntary PAYG withholding agreement (the contractor must supply an ABN).

Viewing an Employee's Current Income Stream

In the desktop app: open Employees >> Pay Settings >> Pay Rates. The STP Income Stream field is displayed there and updates automatically as you change the settings described below.

In the online (web/mobile) app: open the employee, go to Pay Settings >> Pay Rates. The STP Income Stream field is shown as a read-only indicator ÔÇö it reflects the income stream derived from the employee's current settings.

Setting the Income Stream

The income stream is set as a side-effect of the employee's general configuration ÔÇö there is no single dropdown to pick it directly. Use the following settings for each stream:

• Salary & Wages: no action needed. Any employee not configured for the other three streams defaults to Salary & Wages.
• Closely Held Payee:
  • Desktop: tick Closely held employee/payee? under Employees >> Pay Settings >> Pay Rates.
  • Online: tick Is Closely Held? under Employees >> Pay Settings >> Pay Rates.
• Working Holiday Maker:
  • Desktop: enable Working Holiday Tax Scale under Employees >> Tax Rates >> Special Tax Rates and select the employee's home country.
  • Online: tick Use Working Holiday Tax Scale under Employees >> Tax >> Special Tax Rates and select the employee's home country.
• Voluntary Agreement:
  • Desktop: tick Manual variation of PAYG withholding/Voluntary Agreement and enter a valid ABN under Employees >> Tax Rates >> Tax Settings.
  • Online: tick Manual variation of PAYG withholding / Voluntary Agreement and enter the Payee's ABN (If employed under a voluntary agreement) under Employees >> Tax >> Tax Settings.

Checking the Income Stream on an Individual Pay

Once a pay is processed, the income stream recorded on that pay can be viewed or edited:

• Desktop: go to Pays >> Edit Pay >> Edit (beside Tax). The STP Income Stream field is shown in the Edit Tax dialog.
• Online: open the pay and select the tax edit option. The STP Income Stream field is available on the Edit Tax screen.

Correcting the Income Stream on Past Pays

If pays have already been processed with the wrong income stream, use the Retrospective Tool to bulk-update them without triggering a tax recalculation:

• Desktop: open the Tools menu and choose Retrospective Tool. Select the pays to change, then choose Income Stream as the attribute to edit.
• Online: navigate to Tools >> Retrospective Tool. Set What would you like to change? to Income Stream, select the relevant pays, and apply the new stream.

For a full overview of all STP Phase 2 changes, see What Is Changing With Single Touch Payroll Phase 2?