SET UP PAYROLL ITEM FOR PERSONAL DEDUCTION ie items bought on company account
jennifer byrne
Member Posts: 35 ✭
When I set it up I put Salary and wages as the payroll liability. Is that correct?
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Comments
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Hi Jennifer,
I have ours set up to go to a holding account (set up as a "Other Current Asset" account) as the liability account. Quite often the personal deduction will be offset against an entry from a supplier bill, or credit card, which when I enter, I also put to the holding account. The two entries then cancel each other out and I can reconcile the holding account. I'd be careful of using a liability account linked to Salary & Wages, as it might throw out your figures. I hope that helps.
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Thanks Judy for your prompt reply. I know that it has thrown out the figures in P & L. I will have to get the accountant to fix
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The safe way is to have your employee reimburse you for the personal expense completely outside of payroll - there are very strict rules and requirements about deducting funds from employees pay - it is often just safer and cleaner to have them pay you the funds directly rather than deduct from their pay.
Refer to Section 324 of the Fair Work Act 2009 (CTH) provides that an employer may make a deduction from the employee's wages where the deduction is principally for the employee's benefit and is authorised in writing by the employee, with such authorisation specifying the amount of the deduction. However, an employee can withdraw at any time in writing.
Also see https://www.claytonutz.com/knowledge/2015/november/permitted-vs-illegal-deductions-when-can-an-emplo...0 -
Thanks Linda. From now on I will not deduct but get him to EFT amount into the company account to pay for the items. I did read somewhere that because he gets the items cheaper using company account, it could be subject to FBT
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That's another good reason to just keep it out of payroll altogether and just consider it staff discount when purchasing.. Cheers Linda0
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