Can't enter Monthly Salary

Taspool

I want to add my voice to the request to allow a fixed sum monthly salary, not something requiring hours worked.

This seems to be a major shortcoming in the payroll app, especially when it was always in the STP app. Many small family companies, like my own, simply don't work on hourly rates, and even even when hours are unchanged the salaries paid are dependent upon revenues earned.

Could someone from Reckon please advise if this feature will be made available in the near future, or do I need to go to a different payroll app?

(btw, apologies for double posting this from an older comment, but need some response asap)

Rav

@Taspool

I'd recommend checking out my response linked below in relation to similar comments on this topic. Its not a shortcoming in the Payroll App, in fact the STP app in its current form would no longer be compliant with STP with the expansion to STP phase 2. I can't speak for other service providers however I assume other apps/solutions etc will follow in the same vein eventually.

https://community.reckon.com/discussion/comment/20619589#Comment_20619589

Taspool

Hi Rav, thank you for your prompt response to my issue.

However I do not think it is correct to say that STP Phase 2 requires all ordinary salary/wages to be based on an hourly rate, which seems to be what your reply suggests.

STP Pase 2 does require "Disaggregation of gross" which was not required under the old STP app, and that's fine. But nowhere in the ATO information I've seen does it require monthly salaries to be paid at hourly rates. Nor would this make sense, as many companies simply don't work that way. Our family company, as one example, divides net monthly profit between working employees on a commercial basis, mainly related to tasks completed and business introduced, with hours almost irrelevant. And so salaries are single amounts of distributed net profit, taxable as ordinary earnings. Many small companies would also pay one amount as monthly salary, not directly related to hours worked, for various valid and commercial reasons.

I note your comment about speaking to an accountant, noting however I qualified as an accountant and lawyer over 30 years ago, and whilst not having practiced as such for many years, I have some confidence in my reading of the detailed ATO requirements.

Please understand that I'm not trying to be argumentative here, merely seeking a solution which will allow us to comply with STP requirements but consistent with our commercial realities.

Rav

Hi @Taspool

Please understand that I'm not trying to be argumentative here, merely seeking a solution which will allow us to comply with STP requirements but consistent with our commercial realities.

Totally understand and no arguments from my end either. Its better to have a good conversation to thresh it out and come to an understanding.

On that note, I should have added a bit more context. No, not suggesting that all ordinary earnings will have to be based on time parameters due to STP phase 2 however it (STP phase 2) is indeed one of the key drivers behind our decision to retire the STP app and replace it with the Payroll App to remain compliant.

The Payroll App performs actual payroll functions and as such it needs to derive/calculate pay figures based on certain elements that make up a pay run and the make up of an employee eg. hours, tax scale, employment type, leave etc. I'd venture a guess to say this is most common method that a business uses to track pay although I can't say that I'm any authority on that front one way or the other. This is something that the STP app did not do and rather it was essentially just a 'form' to fill out for the minimum requirements of STP submissions for micro-businesses which was compliant at the time but soon won't be. In order to deliver on the requirements of STP phase 2, we need to have a payroll-centric solution that will cater to the specific requirements that it entails.

I understand this is a marked difference in terms of the former reporting method on the STP app however and there will be a phase of sitting down to think about 'making it work' based on your individual circumstances. On the other hand, and we'd hate for it to be the case, it might be not what you're looking for.

Taspool

Okay, I understand your comments, and why the app uses hours as a base quantity in order to provide the payroll features suitable to most businesses with more regular employee arrangements.

I wonder if a small revision might work for businesses such as ours. I see that new earning categories can be added, which currently still require hourly quantity units. Perhaps it could be possible for users to add a new Normal Earnings category which is not hours based. For example, a user added category called Monthly Salary, for which the "base rate" is the full amount of salary and the standard unit of quantity can be = 1 (month).

I suppose this can be done in the current app anyway, by ignoring the labels. With a notional one hour entered as the unit quantity, after entering the full monthly salary as the "base rate". Of course this will wreck havoc with any accrued leave calcs, but again in the real world leave accruals are often irrelevant and unused for family companies. Tax and SGC super should be fine, since these are just derived from total period earnings anyway. Users could be advised that choosing units other than hour-based will invalidate the accrued leave information derived from the app (maybe disable it altogether).

Idrees

Hi Taspool, I am facing the same issue and it doesn't make sense to me to enter hourly rates. Just wondering if you managed to find a solution so I can follow. Thanks.

Taspool

Hi Idrees, no there is no simple solution unfortunately. The workaround is to allocate a notional number of hours and rate for the month, to get the end result you need. Not ideal but it works for base pay. Leave accruals are still a problem, if that matters to you.

Idrees

Thanks Taspool. That's the approach I took but not a good outlook for the app.