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Changes to award transport payments from 1 October 2026

The ATO is making changes to Single Touch Payroll (STP) reporting for award transport payments.

From 1 October 2026:

  • You must withhold PAYG tax from award transport payments previously reported using the AD – Award Transport Payments category.
  • Stop using the AD – Award Transport Payments category to report new payments. Instead, use an STP category that matches the nature of the payment.
  • You do not need to update the STP category for historical payments.

From 1 July 2027, you won’t be able to lodge an STP report for new payments using the AD – Award Transport Payments category.

What you need to do before 1 October 2026

You need to update your STP reporting settings for award transport payments. The ATO suggests two methods of transitioning your report:

  • We recommend the cutover method. It involves creating a new allowance with a new STP category to use for payments after 1 October 2026, which replaces your old allowance.
  • We do not recommend the zeroing out method. It involves updating each employee individually, which is takes longer and mistakes are more likely than the cutover method.

The steps below only explain the cutover method.

Create replacement allowances

Before getting started

Ensure all existing payrolls for the current pay period have been completed and finalised. This helps avoid unintended impacts on payroll processing and reporting during the transition.

  1. Go to HR > System > Payroll > Transaction Type > Pay. The Transaction Type - Pay form opens.
  2. For any allowances with the AD – Award Transport Payments STP category, create a replacement allowance. Use a similar Code and Description, and copy the existing transaction type’s Method, accumulators and other payroll settings.
  3. On the STP tab:
    • Set the Component to Allowances.
    • Set the STP Type Code to a code that is not Award Transport Payments. The ATO hasn’t specified one category for every award transport payment. If you’re unsure which classification to use, see Changes to award transport payments on the ATO website or contact your tax or payroll adviser.
    • If you select Other Allowance, select the appropriate Allowance Detail, such as Transport/Fares.
  4. Save the new transaction type.

After creating a new allowance, run a test pay to check that the payroll calculations, PAYG withholding amounts and STP reporting categories are all correct.

For payments made after 1 October 2026, use the replacement allowance you created.