With STP 2 changes to salary sacrifice how does a Charity with PBI status process this.

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Jane_9938514
Jane_9938514 Member Posts: 8

We currently have staff that salary sacrifice and the payroll is processed using a salary sacrifice deduction which is tracked for tax tracking as Gross payments so it reduces the amount of tax an employee has to pay. We then pay the funds deducted to an external provider for them to distribute to staff.

Can anyone please advise how you would process a payrun in STP 2 to get the full gross reporting and still be able to track the amount salary sacrfriced and still have the employee taxed at the correct rate?

Thanks Jane

Answers

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    Hi Jane

    Reckon are finalising development of their STP2 features at the moment so we don't know as yet. However, the details will be released over the next few months with lots of info on the various scenarios 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Jane_9938514
    Jane_9938514 Member Posts: 8
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    Thanks, I look forward to receiving more information. 😊

    I also hope some of that information will cover how to process employees who cash out annual leave entitlements and Reckon's ability to deduct the leave cashed from the annual leave accrued.

    Thanks Jane

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    Hi Jane

    You would still enter this the same as if they were taking leave - as a payout of Annual Leave - but with the checkbox to not accrue leave ticked, in order to reduce the balance accordingly. I would just also add some explanatory detail to the employee's Notes 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Jane_9938514
    Jane_9938514 Member Posts: 8
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    Hi Shaz,

    Thanks for your response, At the moment if an employee is cashing out leave in the same pay run as normal fortnight pay, I have set up an hourly pay non-accrual pay category for the normal hours worked and then process against holiday pay for the cash out of leave. For example, they work 75 hours and the wish to cash out 75 hours of annual leave. I process 75 hours against non-accrual and 75 hours holiday which deducts leave and then the accruals are correct based on hours worked for the fortnight. If they happen to use other leave within the same fortnight you need to change the accrual basis to be a set amount per pay period prior to processing, rather than hours worked otherwise the accrual rates are incorrect. For example, if they are on holidays and wish to cash out additional 2 weeks in the same pay run. If you check the box to not accrue leave, then no leave is accrued for the fortnight. Or if you leave it checked they will accrue based on 150 hours worked. If you have not gone in and adjusted the leave accrual to be a set amount per pay period.

    But I thought with STP 2 the ATO was wanting to know if employees where cashing out leave so assumed it may be a different payroll item that would need to be created.

    When you do a payout for annual leave on termination pay it also does not reduce the leave available balance and after payroll is processed you need to go in and amend the amount of leave taken by the employee to reduce the available balance to 0.00, so their payslip reflects they have 0.00 leave available.

    Will I need to set up a different pay category for cashing out annual leave?

    Thanks

    Jane

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    Hi Jane

    You shouldn't need to be manually adjusting the leave balances - If an employee wishes to cash out some of their Annual Leave, in order for leave NOT to accrue on just the cash-out portion, create a seperate Paycheque for it & tick the Do not accrue time checkbox. This will ensure leave accrues as normal on their standard-worked-hours Paycheque, but not on the leave being cashed-out.

    … But I thought with STP 2 the ATO was wanting to know if employees where cashing out leave so assumed it may be a different payroll item that would need to be created …

    Reckon has a deferral to 30th June for STP2. They are currently finalising development of these capabilities & will be rolling it out in the coming weeks/months. At this stage, we are still reporting under the original STP requirements only, until this functionality is available.

    “ … When you do a payout for annual leave on termination pay it also does not reduce the leave available balance and after payroll is processed you need to go in and amend the amount of leave taken by the employee to reduce the available balance to 0.00, so their payslip reflects they have 0.00 leave available …”

    If this is the case then your Payroll Item configuration isn't correct! You need to be using a Leave Payroll Item that has been configured specifically to the relevant leave type:

    NOTE: This selection is ONLY available at initial setup - It cannot be changed 😬

    When configured correctly, it will automatically reduce the leave accordingly:

    This is a Paycheque - created in the sample file - paying out unused Annual & Long Service Leave on redundancy termination, both of which are reflected as Lump Sum A - Code R (hence the explanatory names) The Payroll Items have been setup to reduce the applicable leave types & mapped to Lump Sum A [R] Tax Tracking category.

    “ … Will I need to set up a different pay category for cashing out annual leave ..?”

    If STP2 requires it separated, then more than likely yes, however we're not on STP2 just yet. Reckon will be providing plenty of guidance on the new STP2 features once they're released 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Jane_9938514
    Jane_9938514 Member Posts: 8
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    Hi Shaz,

    Thank you for helping to clarify, moving forward I will create seperate payruns for any staff that request leave payouts.

    Is there a guide for payroll item listings so I can create new ones to use moving forward? Most of my annual leave payouts are for voluntary resignations, the same situation applies to LSL. None of our staff were employed before 1993.

    Also is there a correct way to you set up leave loading on final termination for voluntary resignation and also for redundancy?

    Trying to tidy up payroll items in readiness for STP2.

    Thanks

    Jane

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    Hi Jane

    Most leave payouts - on voluntary resignation - are just included in Gross Wages (under the current STP requirements) It's only long-term employees (eg those who've worked for you for 30+ yrs), redundancies, payments in lieu of notice & RDO or Sick Leave payouts that need to be configured to different locations (Lump Sums, ETPs etc)

    The ATO has a good table that's a useful reference to bookmark, here:

    https://www.ato.gov.au/Rates/Schedule-7---Tax-table-for-unused-leave-payments-on-termination-of-employment/#:~:text=Withholding%20amounts%20for%20long%20service%20leave%2C%20annual%20leave%20and%20annual%20leave%20loading

    There's also some good info within Hosted's own Help files on everything, including different Payroll Items. The Help files can be accessed in a number of ways …

    • … from the Help dropdown menu (along top toolbar):

    This has links to the general Help section ("Reckon Accounts Help") & also to the specific window you're in at the time ("Help on this window")

    • … by typing in a word, phrase or question in the Ask box on any window:
    • … & also from the How Do I? dropdown at the top right of any window, which will show you common questions people may have, relevant to that particular section:

    I do also have some guides that I've written up for numerous scenarios so if you'd like to shoot me an email & let me know specifically what you need, I can send them through to you 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)