Setting up Salary Sacrifice


- Paid per hour
- Contributing $100 per pay period
- PAYG calculated on the adjusted gross
- SGC is calculated on the Gross (pre salary sacrifice amount)
Example:
Gross 1,100
SSac 100
Adj Gross 1,000
PAYG W 183 (Based on $1,000)
SGC 104.50 (Based on $1,100)
The only way I seem to be able to get the correct payroll and Payment Summary figures is to set up a payroll item for the hourly rate, a payroll item for $100 salary sacrifice, then set up the salary sacrifice super payroll item under the employee record for super details.
Is this correct or is there another straight forward method?
Comments
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Hi Sonia
Not sure which product you are using?.
But the hourly rate item is correct
Then you need to set up a super item, for the salary sacrifice - this is where the PAYG will be adjusted and show correct figures on Payment Summary
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This is the screens to set up
So Lists > Payroll Item List
Payroll Item > New
Super Contribution Type
Give it a name
Change from Super Guarantee to Salary Sacrifice (SS) (this will add to payment summary in RESC box)
Liability Account - Superannuation Payable or whatever you have set up
Tax tracking type - Gross Payments
Tick PAYG Tax - this will reduce the PAYG payable
Not based on Quantity
No default rate, or limit
It doesn't matter what other payroll items to include if it is a $ value, that only matter is its a %
once set up
Add to employee record and set up $ amount in there
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For me, it is calculating the SGC at $95.00 (based on $1,000).
How can I fix this?
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I'm having a similar problem to this issue, however I'm not a regular or competent user of Reckon Accounts Plus 2019 nor accounting practices.
I'm told that PAYG is calculated on the Gross amount, SGC is calculated on the Gross amount as well, a percentage amount is calculated on Gross Amount for a Salary Sacrifice to Super.
If I can maybe explain with a example,
Gross amount = $5000
PAYG on $5000 = $1023
10% S/S on $5000 = $500
9.5% SGC on $5000 = $475
Take Home Pay = $3477.00
Question 1, - This process differs from the original question in that the tax is calculated on the Gross amount rather than the Net Amount (Gross - SSac) - is this correct? Should the Tax be applied to the Net Amount?
Question 2, - When completing the STP, my reportable Gross should be the Net Salary of $4500(Gross - 10%SS). Instead the Gross is being reported and I am not able to work out how to change it.
Question 3. - The same problem then occurs in the BAS, W1, for total wages, salary etc. Should the Total Net amount of $4500 be reported or the Gross amount of $5000. When I read through the BAS documents it appears the Net amount is the correct one. Again, how is this setup in QB Accounts Plus 2019.
To date, I've tried setting up the payroll item for Salary Sacrifice (SS) that has tax tracking type Gross Payments. With this setup I can get the Profit & Loss reports to work correctly, BUT! the Gross amount of wages in STP and BAS, W1, reportable will not show the correct amounts.
Any assistance would be most appreciated.
Mike
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Hi Mike
The purpose of Salary Sacrifice is to reduce PAYGW because the PAYGW amount is instead calculated on the pay AFTER the SS amount has been deducted
Your example reflects the standard pay without any SS.
Here’s how it differs with the SS:
Gross Amount = $ 5,000
LESS SS Amount of $ 500 = $ 4,500
(NEW) PAYGW = $ 849 (Calculated on $ 4,500 instead of $ 5,000)
(NEW) Take Home Pay = $ 3,651
These amounts remain unchanged:
10% SS on $ 5,000 = $ 500
9.5% SGC on $ 5,000 = $ 475
Q1 - Yes, with SS or RESC, the tax is calculated on the adjusted gross amount (after SS comes off)
Q2 – Yes, if set up correctly with STP, the adjusted (reduced) gross amount is the figure reported (eg after any SS/RESC) along with the SS/RESC amount as a separate total.
You need to make sure you have set it up as follows:
* Payroll Item Type = “Company Contribution”
* Super Contribution (dropdown option) = “Salary Sacrifice (SS)”
* Tax Tracking Type = “Gross Payments”
* Taxes = All ticked (this allows the PAYGW to calculate on the reduced/adjusted gross)
Q3 – Yes, again the adjusted gross (after SS/RESC) is the amount reported at W1
In your Simplified BAS window, check that you only have your Gross Wages account selected at the W1 label & only your PAYGW liability account at W2.
NB: Also check your Payroll Items are all linking to the correct Expense/Liability accounts - It may be that you have one/some linked to a main header account instead of the specific subaccount …?
Shaz Hughes Dip(Fin) ACQ NSW, MICB
Reckon Accredited Professional Partner Bookkeeper / Registered BAS Agent (No: 92314 015)
Accounted 4 Bookkeeping Services
Ballajura, WA
0422 886 003
Shaz Hughes Dip(Fin) ACQ NSW, MICB
*** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***
* Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *
Accounted 4 Bookkeeping Services
Ballajura, WA
(NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
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Hi Shaz,
Thank you so much for answering all my question with such concise information and instructions.
Using your instructions to Q2. I have now managed to get the correct adjusted gross and PAYGW amounts, thanks!
Is it possible to apply these updates retrospectively, i.e my Payroll entries for this FY 2019-20 to date do not have the correct amounts and I would like to fix them and reissue the STP to the ATO?
Again, thanks for taking the time to address my queries.
Mike Elliott
0467 573 505
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Hi Mike Glad you’ve got it sorted
As STP reports YTD amounts each time, provided your payroll figures are now correct, you don’t need to do anything further for STP as your next STP submission will automatically reflect this. However, you will likely need to lodge BAS/IAS revisions (for the Gross Wages (W1) & PAYGW (W2) amounts) If you lodge these yourself via the ATO Business Portal or your myGov account, you can open the relevant lodgements & click on the “Revise ...” button at the bottom of those screens. Shaz Hughes Dip(Fin) ACQ NSW, MICB Reckon Accredited Professional Partner Bookkeeper / Registered BAS Agent (No: 92314 015) Accounted 4 Bookkeeping Services Ballajura, WA 0422 886 003 shazinoz2@bigpond.com www.accounted4bs.com
Shaz Hughes Dip(Fin) ACQ NSW, MICB
*** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***
* Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *
Accounted 4 Bookkeeping Services
Ballajura, WA
(NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
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Hi Shaz,
Sorry to disturb you and hope you can help me again with this issue :( Since updating to Reckon Accounts Plus 2020 due to new Tax Tables, I'm starting to have problems again with this Salary Sacrifice and its effect on P&L Reports.
According to my accountant I haven't completed the process correctly for the Last Quarter BAS. As he is not familiar with Reckon he can't help with the setup of Reckon Accounts to fix the issue.
The problem I'm facing is when I run the P&L statement report, the SS amount is showing as profit , i.e -$500, is not being subtracted from the gross wage total, the accountant expects the report to read Gross Wages = $5000 - $500 = $4500?? As I have very little knowledge, (read none!), I just don't know where to start to fix the issue. The accountants work around is to do a Journal entry to circumvent the error, I would like to fix it properly however.
I'm setting up Reckon Accounts again as per our previous discussions but have come up against a few problems.
Just to clarify the setup, I've followed your previous instructions above with some exceptions:
- I need to setup a new Item Name in the the Payroll Item List.
- Next, Payroll Item Type. Should this be "Company Contribution" or "Super Contribution (Company & Employee ....... etc)? If I choose " Company Contribution", I don't get the option to select "Salary Sacrifice (SS)" on subsequent screens, it goes to a screen asking for "Name used in payments and payroll reports", then "Agency for company-paid liability". If I select "Super Contribution (Company & Employee .... etc), I get the option to select "Salary Sacrifice (SS)".
- Depending on which option I select above, I'll choose "Salary Sacrifice" in this case and in the setup Terry mentioned above. This is based on some testing I did with either option, If my setup uses "Company Contribution", the amount is put under Super SGC Expense and not Salary Sacrifice.
- The next screen asks for "Agency for employee-paid liability". For the liability account, should this be a type "Other current Liability" i.e Payroll Liabilities\Salary Sacrifice Liability or an "Expense", ie Payroll Expense\ Salary Sacrifice Exp? Again with testing, if I use the "Expense" it shows up on the P&L in RED, i.e profit, on its own line item. This gives incorrect totals , hence the accountants concerns.
- Next, "Tax Tracking Type", I've selected "Gross Payments". This screen mentions the amounts paid will appear under "Gross Wages" but this doesn't appear to be the case.
- Next, "Taxes", PAYG Tax is selected.
- Not based on Quantity
- Default Rate and Limit, I've entered 10% .
- All payments in contributions included.
In summary, the BAS shows the correct amounts so this is ok. The problem is the P&L reports. I've attached copies to help explain the issue mentioned above.
An help you can offer in solving this issue would be greatly appreciated. Unfortunately we have very few Reckon Partners near to us that i can ask for assistance .
Many Thanks
Mike
0467 573 505
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Hi Tony
Did you refer to my original instructions?
If you’d like to email me directly, I’ll come back to you tomorrow in more detail if necessary 😊
Shaz Hughes Dip(Fin) ACQ NSW, MICB
*** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***
* Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *
Accounted 4 Bookkeeping Services
Ballajura, WA
(NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
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Hi Shaz,
Thanks for the help, I'll contact you via email.
Regards
Mike
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