The W1 and W2 labels explained¶

Your Activity Statement uses short codes, called labels, for each box. Two of them cover payroll. W1 is the total wages you paid, and W2 is the tax you held back from those wages and owe to the Australian Taxation Office (ATO).

These are the two labels the ATO can fill in for you from your Single Touch Payroll (STP) reports.

In one line

W1 is the total wages you paid (the gross amount). W2 is the tax you withheld from them. STP feeds both.

Why this matters¶

W1 and W2 are the payroll figures on your Activity Statement. If you know exactly what each one covers, it is easy to check the pre-filled amounts against your own payroll — and to answer the question "why doesn't my BAS match my payroll?"

What you will learn¶

What the W1 label covers
What the W2 label covers
How STP feeds both labels

Understanding the concept¶

W1 — total salary, wages and other payments. This is the gross amount: the full wages before any tax is taken out. The ATO describes W1 as the total gross salary or wages and other payments you made for the period. It includes things such as salary, wages, allowances and leave loading paid to employees.

W2 — the tax withheld. This is the total amount you withheld from the payments shown at W1. It is the tax you took out of wages to send to the ATO on your employees' behalf.

So the two labels are a pair: W1 is the wages, W2 is the tax taken out of those wages. W1 is always the bigger, gross figure; W2 is the slice held back for tax.

How STP feeds both. Every pay you report through STP includes the wages and the tax withheld. The ATO adds up your reports for the period and uses those totals to pre-fill W1 and W2. These are the labels the pre-fill fills — you check them and confirm.

For accountants & bookkeepers

W1 is the total gross salary or wages and other payments; W2 is the total amount withheld from the payments shown at W1. STP data pre-fills both on the electronic Activity Statement. The other withholding labels (W3, W4) are outside STP and are not pre-filled.

Example¶

Sam runs a small bakery and pays two staff. Across the quarter, Sam paid a total of $40,000 in gross wages and withheld $7,000 in tax from those wages.

On Sam's Activity Statement, W1 shows $40,000 (the gross wages) and W2 shows $7,000 (the tax withheld). Both came from the STP reports Sam sent each pay. Sam checks them against the payroll report, sees they line up, and confirms. Seeing W1 as the gross and W2 as the tax makes the pair easy to read.

Common mistakes¶

Putting the tax-withheld amount at W1 — W1 is the gross wages, not the tax.
Thinking W1 is wages after tax — W1 is the gross amount, before tax is taken out.
Expecting W1 and W2 to be equal — W2 is only the tax slice of the W1 wages.

How this works in myaccountant¶

In the app — because myaccountant reports each pay run to the ATO through Single Touch Payroll, the gross wages and the tax withheld from every pay are what the ATO uses to pre-fill W1 and W2 on your Activity Statement. You can run your payroll figures in the app to check both labels before you confirm them.

Key points¶

W1 is the total wages and other payments — the gross amount before tax.
W2 is the tax you withheld from those wages.
W1 is always the bigger figure; W2 is the tax slice of it.
STP reports feed both W1 and W2.
These are the two labels the pre-fill fills in for you.

Learn next¶

General information only — not tax, super or financial advice.

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