High income earners who earn super above SGC-How to handle excess Super?

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masil
masil Member Posts: 5

Hi we have Reckon with premier payroll built into it. We have some high income earners who incur superannuation above the Quarterly SGC maximum. This Super is considered part of their commissions so our accountant has advised to pay it to the employee directly as wages instead of their superannuation account (earning no further superannuation but incurring tax). These employees have agreed with their accountants that this is the best thing. How do I change this excess super from a liability cheque to their superannuation fund into a payroll item for that period. I have set up a new payroll item incurring no further SGC but incurring payg. How do I get it out of the liability section & into this new payroll item?

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  • Acctd4
    Acctd4 Accredited Partner Posts: 3,460 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    You're very welcome @masil 😊

    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!)

Answers

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,460 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited June 2023
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    Hi @masil

    Do you mean you have Reckon Accounts Premier (the accounting program with integrated Payroll) or are you referring to Reckon Payroll Premier (Reckon's stand-alone in-depth Payroll-only program) ?

    When you say they "incur superannuation above ...", is this additional Super that the employees are paying OR additional Super that the employer is paying ???

    If the commission is OTE, SG Super may still be payable on it:

    https://www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/How-much-super-to-pay/List-of-payments-that-are-ordinary-time-earnings/#:~:text=Yes-,Commission,Yes,-Allowances ... UNLESS:

    • an employee earns above the maximum superannuation contribution base OR
    • an employee has multiple employers & has opted out to prevent exceeding the Super threshold cap (There are specific protocols & forms for this opt-out that need to be used on a qtr-by-qtr basis)

    It's important to be aware that it's not a voluntary choice how it's treated & if not treated correctly, the employer can be liable for significant fines/penalties.

    An employee also can't be paid their genuine super as "wages" either so I think you need to determine whether this IS actually superannuation or if it is in fact, commission 😬

    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!)
  • masil
    masil Member Posts: 5
    edited June 2023
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    Thank you Acct4,

    "Do you mean you have Reckon Accounts Premier (the accounting program with integrated Payroll)" - YES

    "OR additional Super that the employer is paying ???" - Additional Super the employer is paying as they have a large income.

    "If the commission is OTE, SG Super may still be payable on it:" - What is OTE? By contract this super forms part of their commission calculation. So our accountant has advised that as it forms part of the actual commission by contract agreement and this particular employee has maxed out their non-concessional superannuation contributions....they may then be paid this (above the SGC)super in the form of wages not incurring any further Superannuation.

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,460 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited June 2023
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    Hi @masil

    OTE is "Ordinary Time Earnings" & is the collective name for all the types of payments that attract SG super.

    (I'm a bit confused by: " ... Additional Super the employer is paying as they have a large income ..." as the employer specifically doesn't have to pay super because they have a large income !?)

    But to answer your original question ... You would need to Unlock each of the employee's applicable Paycheques & remove the Super from them. Then enter a new Paycheque when you pay the employee the additional wages.

    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!)
  • masil
    masil Member Posts: 5
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    Ahhh perfect!

    Trust me I am under instructions of the accountant for this particular employee of which is quite a unique situation. But that helps me 'fix' the situation so I can disperse the amount as wages on which PAYG & Payroll tax will be paid but no further Superannuation.

    Thank you so much