Salary sacrifice in pay runs

JillO
JillO Member Posts: 16 Novice Member Novice Member
edited January 3 in Reckon Payroll

Hi, I have the free Reckon Payroll STP app. I'm trying to reconcile EOFY but having problems.

I previous financial years I have not included Salary Sacrifice in gross earnings. Should I now be doing this? Up until now I have just been entering it in under salary sacrifice in super section. I notice it comes up as a deduction and is subtracted from gross earnings when I submit it to ATO. This means I haven't been able to reconcile my accounts. I welcome your advice.

Comments

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Hi @JillO

    If you've been entering salary sacrifice into its dedicated field within the pay run then you've been doing it correctly.

    Please note, in the EOFY finalisation screen salary sacrifice balances (also known as RESC) will be sent to the ATO as part of the submission however it just does not visually appear on the finalisation screen at the moment.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Yes I have been just entering it under salary sacrifice only and have not included it in gross earnings. So this is correct? It means the EOFY amounts submission in the app do not agree with my books for gross earnings and also tax. I also have been unable to record reportable super contributions for my husband who is not otherwise earning any income/drawing a wage from the business.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Hi @JillO

    Yes I have been just entering it under salary sacrifice only and have not included it in gross earnings. So this is correct?

    If you've been entering your salary sacrifice figures into the specific field highlighted in my screenshot below then yes you've been doing it correctly.

    image.png


    It means the EOFY amounts submission in the app do not agree with my books for gross earnings and also tax.

    In terms of the EOFY finalisation in the app, at the moment it does not display RESC balances ie. it will only show any regular super balances paid at the default rate. It will not show RESC (salary sacrifice or super paid over & above the default rate). It IS recorded and will be sent in the submission, however it just does not display in the EOFY screen on the app.

    If that's not what you're referring to in terms of your gross and tax not matching up then we'll need a bit more specific info on what's happening ie. what is the variance and where its come from in the pay runs.


    I also have been unable to record reportable super contributions for my husband who is not otherwise earning any income/drawing a wage from the business.

    Salary sacrifice is correlated with the earnings in the pay run ie. there needs to be earnings that are being 'sacrificed'. If you aren't entering any earnings for your husband then the salary sacrifice will not occur as there's nothing to sacrifice from ie. earnings.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Thanks Rav, I think I have been entering salary sacrifice correctly then. I had adjusted the tax deducted amounts to correlate with the amounts actually deducted when I completed each pay run so the ATO should have the correct figures, even though the EOFY submission showed a different amount. In my husband's case he is receiving income purely as a reportable super payment. It seems I can't enter this on the App. I have sent paper copies in of PAYG payment summaries so hopefully that will suffice.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Hi Rav,


    I have checked the EOFY report submitted to the ATO and my payment summary for last financial year and they are incorrect despite me apparently entering the details as you have indicated. I'm not sure what I am doing wrong. I have tried to do an update to the EOFY figures on the app, under "View and Update initial YTD balances" using the amounts I think are correct. It is allowing me to enter the amounts but then it doesn't seem to have updated them when I go back and check the EOFY report again. I'm not sure what to do now.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Hi @JillO

    Just a couple of things to clarify

    ..and my payment summary for last financial year and they are incorrect

    When you say "payment summary" above, are you referring to the income statement in MyGov?


    Also, can you give me a bit more specific info on what is incorrect and the variation between the two.

    Finally, when you're going through trying to enter any balances in the initial YTD section, what is the exact process you're going through? Specifically, are you entering a date in the previous financial year when adding the balance in that area?

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    yes, the My Gov income statement.

    All amounts are incorrect. Gross payments show under 2K, but should be about 9K. Tax shows only $468 but should be $1908 and employer super is approx $220 but should be $880; likewise RESC shows $280 but should be $1110.

    I was trying to adjust these amounts for the last financial year in the initial YTD section.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Does the EOFY finalisation in the app itself show the correct balances (aside from the RESC aspect I outlined earlier on in this thread) OR does that also show incorrect balances as well?

    If so, how have you been creating pay runs throughout the year ie. have you been using a custom earnings item that is not applicable for tax or have you been using just the default ordinary earnings item?

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Yes, It shows incorrect balances also.

    I think I have been customising earnings and tax amounts as the tax displayed is always incorrect as it is a second job for me so I don't want to apply threshold amount.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Can you please check that any custom earning items you've been using in your pay runs has been created as a tax applicable item. You can verify this by going into Settings ➡️ Earning items ➡️ Select the earnings item you created ➡️ The setup of the item will be displayed. Check whether the 'tax applicable' option has been ticked (and if a calculation method selected if applicable).


    If the earning item you've been using has been created as not tax applicable then its not part of your STP submissions. To accurately submit earnings to the ATO via STP you must use an earnings item that is tax applicable. You can override tax within an individual pay run however the item must be subject to tax in order for it to be subject to STP.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    it is classed as ordinary earnings paid on an hourly basis and the Tax Applicable box is ticked.

    Calculation method is gross payments. Super & Salary sacrifice preferences are ticked.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Ok and is that the same earnings item that you've used on every single pay run? Or have you used some other earnings item as well? If so, is that setup for tax or is it setup as a tax free item?

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Yes, I use the same earnings item each payrun.

    I only submit quarterly reports, being a small business with only 2 employees. I have now realised there is a small error in super and salary sacrifice amounts submitted to the ATO for the Sep 21 quarter. I am trying to correct this and resubmit it to the ATO but don't seem to be able to adjust the amounts.

    I have also realised that because I submitted the Jun 22 quarter details on Jul 4, they have probably not been included in the EOFY, despite stating the payrun date as Jun 30 22. Adding the tax deducted amount for this quarter will then adjust the EOFY tax amount, but will not correct the gross earnings amount though (still $855.20 short). Can I go back and at least adjust the submission date somehow?

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    PS adding Jun 22 quarter to submitted EOFY amounts will also correect super and salary sacrifice amounts

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    If you created the June 2022 pay run with a pay date in July ie. July 4 in your example, then that pay is in the current 2022/23 financial year. Its the pay date that is the determining factor on where a pay run falls as opposed to the pay period.

    So if that June pay run has a pay date of July 4, you'll need to delete it and recreate it in the Payroll App from scratch and send through the STP submission as normal.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Hi Rav,

    It does show 04 Jul as pay date so I am trying to cancel the pay run as you have suggested but with no success. How do I delete it to start again please?

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Switch the pay run to draft status first and then you'll be able to delete it. I've made a quick screen recording below of the process -

    Delete draft pay run.gif


  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Thanks Rav,

    That was very helpful and worked! I am still just having difficulty adjusting the Sept quarter employer super amount. Because June 21 was paid in July 21 I need to include this amount ( and not include Sept amount as that was paid in Oct). It is not allowing me to customise the super amount, only set the rate, which does not provide the correct figure as the rate changed on July 1. Is there some way I can customise the super amount or should I just delete the whole Sept quarter and redo it from scratch?

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    Your super balance will always calculate using the % rate off the earnings in the pay run.

    Sorry I'm having trouble following this or at least trying to put it together in my mind.. You've mentioned June and July 21 in your reply above, are you saying that a pay run that you dated in July 2021 ie. so its counted in the 2021/22 financial year is incorrect and that is what you're currently trying to edit?

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Sorry, it's hard to word it clearly. I am saying that I have found that the super in the Sept quarter last year is incorrect and it should actually include the super amount from Jun 21 as that wasn't paid until July 21. Similarly the Sept 21 payment should not be included as that wasn't paid until Oct 21. The problem is that the super rate in Jun 21 was only 9.5 percent but was 10 from Jul 21. I think I will just delete the Sept submission and redo it.

  • JillO
    JillO Member Posts: 16 Novice Member Novice Member

    Hi Rav,

    I have made adjustments and am getting closer to the correct eofy figures. The tax deduction amount is now ok but the earnings is approx $1100 less than it should be. The amount it is out by is exactly the same as the salary sacrifice amount. Should I therefore be including the salary sacrifice amount in the total earnings amount also? That way I should arrive at the correct figure as per my books.

  • Rav
    Rav Administrator, Reckon Staff Posts: 16,608 Reckon Community Manager Community Manager

    I'd just be a bit careful with that because as I mentioned in my first reply much further up in the thread (here), RESC components such as salary sacrifice ARE included in the EOFY submission, its just that you can't see it visually on the EOFY finalisation screen.

    Salary sacrifice/RESC will not appear as part of your earnings balance, they are classed separately.

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