Hi Tahlia,
I would just enter it directly into the record/make deposits screen.
Create a brand new other income account called PPL Received (or something like that) to allocate it to which you can use in that screen.
Then with the paid parental leave item create a new expense account also to allocate the expense to.
That way it will show clearly when you look at a Profit & Loss.
There is definitely no GST on this.
Kind regards,
Sally McIntosh (sally@samsolutions.com.au)
Hi Charles,
This is from the Paid Parental leave toolkit:
In accordance with Australian Accounting Standards, Paid Parental Leave funds you receive from us must be treated as a liability until you have provided Parental Leave Pay to your employee.
You should not account for Paid Parental Leave funds as revenue or Parental Leave Pay as an expense.
AAH; stand corrected, but a wee bit confused.
According to Centrelink
1. Centrelink provides funds in advance either fortnightly or six weekly
2. From 1 July 2014, the rate of Parental Leave Pay is $641.05 per week before tax.
3. Employer must withhold PAYG at either current PAYG or set to 15%
4. It must be included on the employee's payment summary and it does not need to be separately identified on it.
From the Department of Finance & Deregulation:
Accounting for the Paid Parental Leave Scheme by Commonwealth Employers
Statement of Comprehensive Income
1. Dept Finance is of the view that receipts received by Commonwealth employers under the scheme are not revenue for the purposes of AASB 118. Consequently payments to employees for parental leave are not expenses.
2.There is an alternative view applying to for-profit entities only that they should recognise the receipts as grants, and hence be recorded as revenue (with corresponding expenses). For-profit entities adopting this approach should follow AASB 120 and offset revenues and expenses in the Statement of Comprehensive Income. Division 19 of the FMOs has been updated to support this offset for transactions which relate to the scheme.
The only real issue is how to reconcile the amount received with the PPL payments, whether that is done via income vs expenses or a PPL Wage line and then PPL reimbursements as sub-account is neither here nor there.
I personally think that the Dept Finance view (1) just makes things difficult. I can see where they come from, they want to separate the Govt revenue from what they see here as a reimbursable expense, but who cares put it on a separate line.
Just a bit more from the ATO
Paid parental leave funds
You will not need to account for PPL funds as revenue or parental leave pay as an expense in your financial statements. However, you will need to include the cash receipts and cash payments in your statement of cash flows. Your accounts will need to show PPL funds received as a liability until you provide parental leave pay to your employee.
PPL funds are assessable income. This means you need to declare funds received from us as assessable income and you may claim a tax deduction for the amount of parental leave pay provided to your employee(s). This arrangement is in line with the treatment of other payments received by employers, and wages paid to employees.
You will need to be able to separately identify Parental Leave Pay from other amounts, as parental leave pay does not attract a superannuation guarantee, payroll tax or workers compensation premium liability
All of this is more or less consistent with Centrelink and Dept Finance regarding Commonwealth Employers however the big question is however
"If PPL Funds are assessable income then how do you account for it"
Not seeing it as revenue takes it out of income; my view is that it is best seen as Grant/Wage Subsidy/PPL Grant whatever and then normal payroll as PPL wage item; it then needs to be reconciled (however you want) and any unexpended funds go to liability account called Unexpended PPL and has to probably go back to Centrelink or the ATO.
