Pay Super with no Director’s Fee

GraSalReckon

Hello, due to a loss in my 22/23 company, my accountant wants me to amend a previously lodged 22/23 Payrun to show zero Directors Fee (salary) and just show the superannuation paid. When I try this all seems fine except the only option for superannuation appears to be “salary sacrifice”. With zero wage and only super, the Nett Pay becomes a negative number, which looks totally weird. How do I pay director’s Super with no wage and not get a negative number. Thank you, Graeme

Rav

Hi @GraSalReckon

Super Guarantee can only calculate from the earnings component in the pay run.

Are you wanting to salary sacrifice the entire component of the earning balance within that pay run to super? If so, then you'll still need to have the earnings component in the pay run and then add the entire balance of those earnings to salary sacrifice which will attribute it to RESC.

GraSalReckon

Hi Rav, thank you for your response and clarifying what I suspected would be the case. Regards, Graeme

GraSalReckon

Hello ..... I'm back. I still have an issue with resolving my FY 22/23 tax, due to the need of amending the last 3 quarters of the financial year to Zero.

The Reckon Payroll App has all quarters marked as "DONE" and look correct, yet the ATO has my tax as "Not Tax Ready". After speaking last night with my accountant (for which I'm billed) who spent time talking to the ATO, she advised me that while my pre-fill looks correct, the ATO can see that Reckon has not properly updated the amendments to the ATO and it has to to be done manually.

According to the ATO, I'm not the only person in this situation. As I was previously using the free App for last financial year, no one at Reckon will speak to me, yet they're causing me this problem which if not corrected will result in me paying a considerable tax bill.

The attached photo shows correctly "No Paid Employees" and and therefore doesn't allow for a "Declaration", I assume as all values are zero, there's nothing to declare.

Please help. Regards, Graeme

Rav

Morning @GraSalReckon

We'll need a lot more detailed information on how you've created your pay runs.

From the background of your screenshot, I can see what looks to be 4 pay runs for the 2022/23 financial year however how are those pay runs made up? More specifically, are you using a custom earnings item that has been setup as tax applicable?

This is important as only tax-applicable earnings are included and sent in the STP submission which could be a reason why you're receiving that message when trying to send an EOFY finalisation.

Here's an example to illustrate what I'm referring to. Starting from the left -

1️⃣ I have created my own custom earning item to use in pay runs which has been created as non-tax applicable.

2️⃣ I have then created pay runs using this earning item.

3️⃣ However when it comes time to create and send an EOFY finalisation, the app states that I have not paid any employees. This is due to that particular item not being tax applicable and therefore not included in the STP submission.

GraSalReckon

Hi Rav, thank you for your response. I couldn't respond yesterday as I was out all day ..... we're orchestral musicians. I can see what you've done and your comment "to create and send an EOFY finalisation, the app states that I have not paid any employees". As I mentioned previously, I've had to amend the last 3 quarters of the financial year to Zero from a previous large amount. By my understanding of what you suggest is, as I've paid no one it doesn't acknowledge the amendment. This appears to be why the ATO told my accountant that Reckon has to do the SUBMIT TO ATO manually. I'm caught in limbo. Regards, Graeme

Rav

Thanks for getting back to me @GraSalReckon

Ok if you've edited all your pay runs to zero ie. there is no pay, then there is nothing to report hence why the EOFY finalisation screen is showing that message.

When you edited your pay runs to zero, I'm assuming you then sent an update event for those amendments via STP submission. When you send an Update Event ie. to reflect changes to pay run balances it adjusts employee data only. There is no employer component to those update event submissions which is why it only shows that an entry has been received in the ATO Business Portal but doesn't show the detail ie. balances/figures.

This appears to be why the ATO told my accountant that Reckon has to do the SUBMIT TO ATO manually. I'm caught in limbo.

I'm not quite following the above however. I could misunderstanding but I'm not sure if there is anything further you need to do.. ie. if there is zero pay to report, then to my knowledge an STP submission is not required.

GraSalReckon

Hi Rav, thank you. Your comment "to reflect changes to pay run balances it adjusts employee data only". That is the part it hasn't done. It hasn't updated the employee (my wife) to zero from previously $17,500.00. The ATO still sees $17,500.00 as Not Tax Ready.

Rav

Hmm ok, genuinely not trying to shift blame here but that sounds more like a problem on the ATO end than ours but with that said, I do have a suggestion which hopefully gets this straightened out for you.

What you could do is create a new pay run for your wife for an arbitrary amount such as ordinary earnings of $0.01 and mark it as paid (do not send the STP submission for this).

What this will then do is allow you to create and send a zero balance EOFY finalisation which will set all balances to zero on the ATO end. Once that EOFY finalisation has been successfully processed (ie. it shows a Success status) then you can just delete that 0.01 pay run.

I've created a quick screen recording to illustrate what I'm referring to however please note, my screen recording shows me doing this for the current 2023/24 financial year. In your case if it refers to the 2022/23 FY then please ensure you date your pay run with a pay date that falls within the 2022/23 FY such as 30 June 2023 for example.

ℹ Click on the screen recording for a larger view

Hopefully that makes sense but let me know if you have any questions.

GraSalReckon

Hi Rav, this is so funny. Earlier today I was thinking if such an idea of a .01c payrun would potentially work. Hmmm, I'll give it a go but first carefully read what you've done. Thank you for your patience. I'll be soooooo glad when this is over. Kind regards, Graeme

GraSalReckon

Hi Rav, OMG ...... I think it's worked. Thank you so much Kind regards, Graeme

Graham Boast

Hi Graeme.

I don't think you have finished yet. If your gross wage is now zero, then you cannot have SGC Super - it is now probably needs reclassifying as a personal contribution, with any payments made from the entity now classified as a drawing or director's loan. You can probably fix this up directly with the super clearing house, but I don't think you can leave it as SGC Super.