ATO error rejections - SalSac of 100% of income for one staff member

Dear Rav,

I am not sure whether you can help with this one? Please find attached two pdfs of error status' which I have just seen related to a single staff member of mine who wishes to salary sacrifice 100% of her earnings. My accountant tells me this is quite legal, and I now must find a way to make the STP submission to the ATO!

The explanation from the ATO is extremely opaque (as you will see from the attachment), and I cannot see how I can adjust the numbers in the submission to overcome the problem??

Can you help?? - As always I sincerely appreciate your wisdom in all of this. Thanks

Frank

Errors from the ATO Nov22.pdf

SBSCH-ANNUAL-STMT-2012-VIRGINIA ADAMS.pdf

Accepted answers

All comments

Rav

Hi Frank

I think I'll need a bit more info around how these pay runs have been entered/setup to establish what's happening. From that error message, it looks like the end total of the pay run is ending up as a negative which is would be the cause of that rejections.

Can you go into one of those pay runs that have come back as rejected and take a screenshot of what pay items & balances you've entered into it. Please block out any sensitive info such as employee names etc, I just need to see the breakdown of the payrun.

frank_10114727

Will do Rav. I am away from my laptop at the moment. Will send a screen shot about 4pm today. Huge thankyou!

Frank

frank_10114727

Dear Rav,

Here is an example of the way in which I have configured this staff member's STP submission for each of the occasions where it has come back with the same error

Example for Rav where SalSac ATO-'error' occurs.docx

Thanks sincerely for any advice you can provide!

Frank

Rav

Thanks for that Frank.

Based on your screenshot, everything looks ok in terms of how the pay run has been created so a tad strange just on face value of it.

Have you ever been able to create a pay run successfully for this employee where they sacrifice 100% of their earnings or have all submissions been rejected when its been created like this?

I went through some testing in my own account just now but unfortunately since the error follows the submission itself I'm not able to try that part since a submission is live data. With that said, can I get you to shoot me a private message with some additional details -

Your ABN
Pay date of the pay run in your screenshot example
Name of the employee this is affecting
Any other screenshots showing the pay run info and error response, particularly if the error messages show any different values.

I'll see if I can do a bit more digging with our dev team.

frank_10114727

SBSCH-ANNUAL-STMT-2012-VIRGINIA ADAMS.pdf

Again, sincere thanks for looking into this. In answer to your questions:

ABN 68 074 554 528

Paydate of the screenshot was the most recent: 16 Nov 22

Only Ms Virginia Anne Adams has asked for this arrangement of 100% salsac, and in each submission, (done the same way as 16Nov22) an identical error message on all 7 instances is apparent. The instance of non-error on 7 Sep did NOT include any pay for Virginia,

However, the two submissions on 24 August: the smaller one WAS acceptable and included Virginia having some withholding tax recorded (this date was the commencement of the Salsac arrangement), with the second 24 August submission which WAS NOT accepted did include Virginia when the 100% salsac arrangement commenced for the first time.

No differences in any of the 7 error messages

Here is a visual of the submission of 24August, along with Virginia's listing for that payrun where 100% Salsac commenced. (Hers is at the bottom of the graphic, with my other staff payments above.

Hope this helps

frank_10114727

Dear Rav,

I am not sure whether you received the above post? I apologise that somehow this communication got stuck and kept telling me it was 'in error' or somesuch

Ravi2 - 24Aug rejected run with 100% salsac submission included.docx

I am hoping that your technical team might have been able to see what I need to do to my past submissions which included Virginia's 100% salary sacrifice

frank_10114727

Dear Rav,

I am wondering whether the above transmissions have come through to you? - (There was a peculiar message that came back to me something about the transmission being 'too wide' or something)??

Even if you have no answer yet for me, perhaps you could just reassure me that the materials a bove have arrived for your team to consider what on earth I have done wrong for my staff member Virginia???

Rav

Hi Frank

I'm really sorry, I'm not sure what happened but I just received notification of all your follow up posts in one go right now. I'll need to get that looked into so apologies for the delay.

Now getting back to your situation, I notice that you're using a custom earnings item. Is there any particular reason you're using that and not the regular ordinary earnings item?

Regardless, can we take a closer look at the setup of that item, specifically whether it is setup as 'tax applicable'?

I know that you're using it for the purpose of salary sacrifice but is the item itself setup to be tax applicable? This is a requirement for earnings to be reported via STP and I have a feeling could be where things are going wrong. Any tax component will be automatically adjusted after entering a balance

To check whether the item is set to tax free or subject to tax go to Settings ➡ Earnings items ➡ Select the custom item you created; "100% salary sacrifice" ➡ Check whether the item has been set to TAX FREE or applicable for tax.

Let me know how you get on.

frank_10114727

Thanks so much for your helpful comment: In answer to your question, I set it up as 'tax free' rather than tax applicable - so perhaps that is part of my problem.

Since starting on this odyssey to find what I have done wrong, I have got Virginia to provide me with a copy of her pay slips, and I think I have located part of the problem. Please take a look at the first three of the payslips she received for 2022-2023 year. I am also attaching a listing of my excel pay/hours register which I maintain for casual staff like Virginia separate from my records for Reckon, Super clearing house, and ATO.

<attachments removed by admin: 7 December 2:28pm>

Now, apart from the issue of 'tax applicable' on my earnings item: '100% salary Sacrifice' in Reckon, I think that one of the two Reckon STP lodgings on 24 August must be wrong. You will see on the pay slip for 1Aug-12 Aug, I tried to use a regular withholding tax for that one.

HOWEVER, for the second lodging on 24 Aug (pay period 13Aug-26Aug) (using the 100% salary Sacrifice earning item) there is clearly a problem. (Incidentally the ATO warning something to do with -$540.13 seems to relate to the difference between 'Ordinary YTD $3240.84' and '100% salary sacrifice YTD $3780.97')

On 15 September I lodged also an STP for the period 15Aug-9Sep which had a serious mistake on my part: I included a SS payment for Virginia of $5401.39 (+SG$567.15), instead of SS$3780.97 (+SG$397).

So in summary I seem to have more than one error problem to fix.

Your advice on how to progress from here will be much appreciated indeed.

a. Should I change the 'earnings item '100% salary sacrifice' to 'tax applicable' before I go further?

b. Should I amend the 24August stp submission for 13Aug-26Aug to SS$3780.97 (+SG$397)?

c. Should I try to delete all the STPs where Virginia has been paid an re-insert them correctly after altering the SalSac100% earnings item?

d. Should I do something entirely different??

Sincerest thanks

Frank

Rav

Just a quick FYI before anything else, I'm going to delete some of the attachments that you've provided above as they contain certain info that is best not left on the public site.

Ok with that out of the way, the first thing I'd recommend you do is either change the '100% salary sacrifice' item to tax applicable or just use the default ordinary earnings item from here onward.

Secondly, in regard to any pay runs that are incorrect. Yes you will need to amend them to make them correct. To do so I'd recommend following the process outlined in the video guide which I'll link below.

Essentially, you just need to switch any incorrect pay runs back to draft status and make the necessary corrections. Once they are correct you'll need to send the resulting STP submission as an adjustment by ticking the 'Submit as adjustment' option.

https://community.reckon.com/discussion/8031391/how-do-i-edit-or-amend-a-previous-pay-run-in-the-payroll-app

Let me know if you have any questions around this.

Cheers

frank_10114727

Sincere thanks for this great advice.

After eliminating the 'SalSac100%' earnings category - I have redone and re-submitted all the runs which had bounced. Just to confirm with you the 'success' from ATO for my resubmits.

Do I need to worry because the runs where 'review errors' messages remain on the listing below, and the 7Dec updates do not quote any total gross and total PAYG for all the staff in the run other than Virginia??

Cant thankyou enough for your wisdom and help,

Once again, I am in your debt I think!

Frank

Rav

Good to hear you're back on track.

No don't worry about the previous submissions that are in an error status, they will remain as they are. STP is reported on a Year to Date basis only.

Just one last thing, the most important thing is just to ensure the balances you see in the YTD Summary tab in the employee's profile are correct and reflect what it should be in reality.

Since you've completed the adjustments to the previous incorrect payruns I'd say they should be accurate now but I'd recommend just double checking.

As you create more pay runs these running balances will be continually updated and will be what is sent to the ATO as part of your STP submission.

frank_10114727

Rav: Finally! - I have run all the checks on all my employees and the Reckon tallies nearly exactly with the bank, the ATO and the Super clearing house records. Hooray.

Again, sincere thanks

Frank

Rav

Good work 👍, glad you got that sorted and apologies again for the delay.