Salary sacrifice in Payroll app

Boss

Hi, trying to sort out 2022 TR and having issues with superannuation salary sacrifice amount. Basically I paid $20250 super salary sacrify in June 2022 pay run and forgot to added it in Payroll payrun. Now I am trying to amend the payrun adding $20250 as deduction but with the salary being only $20'000, Payroll app giving me an error that I can't submit negative payrun. Any one has had this issue?

Rav

Hi @Boss (epic user name by the way 😄)

That's correct, it won't accept a salary sacrifice amount more than the earnings that are being sacrificed from ie. you can't sacrifice more than what has been earned within that pay run.

Has that pay run been entered in correctly? ie. if the salary sacrifice amount is $20,250.00 shouldn't the earnings component (salary) at least match or be more than the amount being sacrificed?

You can add that additional $250.00 salary sacrifice into the initial YTD screen for that employee by going to:

Employee's profile ➡ YTD Summary ➡ View and Update initial YTD balances ➡ FY2022-23 ➡ Add item for Superannuation

If the employee already has an existing balance in their initial YTD for super then you'll need to add to it.

Boss

Thanks,

Initially I did not entered salary sacrifice super contribution at all until my account told I have to do it. I did pay salary sacrifice super contribution by single payment in June 2022.

I managed to get around this negative payrun amount issue by splitting , $20'250 in two payruns, not sure if it correctly or not but it worked.

The only problem is that if I add salary sacrifice super contribution it reduces the pay run Net Pay and PAYG tax already paid and as a resulty 2022 EYOF payroll report is not matching my BAS spreadsheets.

I think I am doing something wrong when claiming salary sacrifice amounts in Payroll.

Any ideas?

Boss

My accountant just replied me with:

"The additional super doesn’t need to be added to wages that is correct, but it does need to show on the Payment Summary.

I am not sure of how Reckon works exactly so I did a quick google and found this thread on salary sacrifice in the pay runs. Interestingly, it does say you need to include SS in the gross wages so there is enough to salary sacrifice so I may have been leading you up the garden path, sorry! Do you have a salary sacrifice category set up similar to the screen snip below? Here is the thread I was reading:

https://community.reckon.com/discussion/8031856/salary-sacrifice-in-pay-runs

My question is DO I need to add salary sacrifice to the total Wages or not? If it needs to be added, it increases my PAYG tax amount.

Rav, can you please clarify?

Thanks

Screenshot_20230814_130626_Gmail.jpg

Rav

Hi @Boss

There are a few elements from that old post that are now outdated, specifically the Payroll App now shows RESC components such as salary sacrifice in the YTD Summary and EOFY finalisation so just keep that in mind.

My question is DO I need to add salary sacrifice to the total Wages or not? If it needs to be added, it increases my PAYG tax amount.

You need to add the amount of earnings you are sacrificing into the dedicated salary sacrifice field in the pay run only. Its not an earnings component so its not added as an earning eg. gross wages/salary etc, its sacrificed FROM the earnings.

Salary Sacrifice is a component of Reportable employer super contributions (RESC) and will be shown and reported as such when added.

Boss

Hi Rav,

I do get Salary Sacrifice amount in Total RESC in EOFY Summary.

But please check the screenshot below, and check why Salary Sacrifice is added to Deductions thus reducing my Total payrun?

As a result I am getting negative payrun amount.

Thanks

Alex

Screenshot_20230814_142721_Payroll.jpg

Screenshot_20230814_142747_Payroll.jpg

Rav

The reason the pay run is going into negative is because you're entering a salary sacrifice amount ($20,250) that is greater than the earnings in that pay run ($20,000) ie. you're attempting to sacrifice more than what is being earned in that pay run which is incorrect.

You cannot sacrifice more than what has been earned in that pay run.

Boss

Hi,

I do understand re: negative amount issue, will fix that. But just want to confirm that salary sacrifice amount should be in Deductions in payruns and in Total RESC in EOFY Summary, is that correct?

Rav

That's just a payrun summary screen but yes it's correct. When it comes to salary sacrifice, all you need to do is enter the relevant balance within the Salary Sacrifice field for it to be attributed as RESC.