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Salary sacrifice creates negative Net Pay and I get an error

andrewdouch

I own a micro business (and my wife and I are it's only employees). We use the Reckon Payroll App to report STP when we pay ourselves from the business. This year, we've hardly paid ourselves at all, but I have paid super into our super accounts up to the concessional cap.

I want to report this super payment through STP - via the Reckon Payroll app, so I created a new pay run, and chose "Salary sacrifice for super". (seemed appropriate) and entered the amount ($22000).

The details show the following: Earnings and leave: $0.00. Allowances: $0.00. Deductions: $22,000. Tax: $0.00. Net Pay: $-22,000.00. Superannuation $22,000.00.

But when I try to click "Mark as paid" I get the message "Unable to submit pay run These employees have overall negative pay...".

Do I need to add $22,000 as a Bonus, or Ordinary as well, to stop it from being an overall negative pay?

I'd be so thankful if anyone can let me know what needs to be done here.

(I've added some screenshots below)

Comments

swakhlu01 .

@andrewdouch It is my opinion if you are making a one of superannuation contribution as salary sacrifice there is no obligation to report it to ATO as an STP activity. You can make a manual declaration.

But if you want to report it through Reckon Payroll app then you need to show an earnings that is equivalent to the salary sacrifice super amount. The system will then apply a deduction as part of the pay summary so that nett tax component is NIL. However, keep in mind there will be a 10% super guarantee calculation - so you need to adjust the salary sacrifice and earnings figures accordingly to make sure you do not exceed the concessional contribution threshold.

For example - you want to contribute $22000 to salary sacrfice. If you choose earnings as $22000 then $2200 will be contributed as Super guarantee and $22000 as Salary sacrifice. Total super = $24200. Deductions - $22000, Tax - 0.

At this stage some contributors to this community page are reporting that Salary sacrfiice super may not be displaying as correct item in employee Income statement in ATO when the Payrun is made. I am hoping someone in the Community support team will confirm the reasons.

https://community.reckon.com/discussion/8031711/ato-allocation-of-superannuation-after-forwarding-payrun-on-payroll-app#latest

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