BAS Report PAYG Withholding Calculation Error

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In Reckon Accounts, PAYG Withholding at Box W2 on the Simple BAS/IAS report deducts payments made to ATO during the period, which is deducted from the Total PAYG actually owed to ATO, giving a dramatically understated amount. 
This has apparently been going in Reckon for quite a number of years, Reckon has neither admitted nor rectified the problem.

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Peter Kershaw

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Posted 2 weeks ago

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Glenda Veale

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I know, very annoying.  I have to change the figure manually each quarter.
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John Graetz

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Peter.  Are you using Cash or Accrual Accounting?  Under one of my entities, using Cash Accounting, the BAS calculates on the amounts going into the Payroll Liabilities for PAYG Tax account and is not affected by the subsequent payment that I have recorded.  On another note, haven't you been reconciling the BAS figure with the tax reported on the Payroll Summary Report for the period of the BAS?
John
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Peter Kershaw

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John, this client is on Cash reporting. What is an "entity"?
Using Cash reporting, the Reckon BAS/IAS report takes up the payments made to the ATO in that period, and deducts that amount from the amounts withheld from staff wages. It is therefore incorrect in that report, and is therefore misleading regular people who have been convinced Reckon is a trustworthy "Accounting" platform to monitor their private/business accounts and use those reports to lodge their Tax liabilities with the ATO.
I find this unacceptable.
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John Graetz

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Peter.  Change the word entity to organisation.  Perhaps the reason for your problems has not got to do with Reckon not being trustworthy or misleading people, but rather with how you are processing your payroll liabilities e.g. the payment of your Group Tax.  Are you using the process Employees>Payroll Taxes and Liabilities>Create Custom Liability Payments - then selecting the date range - then selecting the PAYG Tax item and proceeding with creating your payment by that method?  Or are you just creating a cheque payable to the ATO, with the amount coded to your Group Tax Liability Account?  If you are not following the correct procedure, you will not get the correct result.  By using the Create Custom Liability Payments method, your BAS will calculate correctly and that may cause you to reconsider your opinion that Reckon is an unacceptable "Accounting" platform.
John L G
(Edited)
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John Graetz

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Peter, if you need further help, let me know and we can talk.
John L G
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Peter Kershaw

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Hi John, thank you for your advice and assistance. I used to use the Liabilities Payment facility in QB, but something in the set-up was incorrect and it was giving odd results in the Balance Sheet. The Client's Accountant/Auditor requested I stop, and use the Pay function.
I have since your advice returned to that function, and it appears, so far, to be operating correctly.
And the BAS report is also correct, as per your suggestion.
Continuing, as QB separates the PAYG and the BAS, using the Liabilities reporting, can you advise on the easiest way of entering 2 cheques (to the ATO) then combining them to post 1 Payable in the Transactions list? I can only see making a new GL Bank Account - "Electronic Payments" paying the 2 amounts for GST and PAYG from that, then Journaling them both to the main Cheque Account. This is cumbersome to me, but I can't see any other way.
Peter
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John Graetz

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Great work, Peter.  You are on the right track.  This is what I do:
1.  Create an "Internal" bank account called Internet Banking/Internal Transfers - your Electronics Payments Bank has the same effect.  I use my account for other purposes where it is easier to use a Bank for some transactions, which aren't appearing in the normal bank account for various reasons - e.g. my payroll ABA payments go to this account, rather than having multiple transactions in the usual bank account when the actual bank account only has one transaction.
2.  
Pay Group Tax via Payroll Liabilities, using this "Internal Bank".
3.  If you are writing a cheque for the full amount of the BAS, (I use Enter Bills), code the Group Tax figure to the "Internal Bank" which will then clear the transaction entered in 1. above.  For me, this is the simplest and quickest way of doing it and results in the minimum number of transactions.

If you need any further help, it may be best to speak on the phone - if so, I can give you my phone number.
John L G 

Hi Peter

I agree with John that you need to use the "Pay Liabilities" method for the above, however you don't need to create 2 separate transactions if you are paying multiple liabilities in one.

 

  • Generate the payment for the PAYGW component via "Create Custom Liability Payments"

This auto-populates the Liability Cheque with the PAYGW payable Payroll Item on that tab

  • Simply click on the Expenses tab & - on separate lines - select any other liabilities & their amount(s) in that payment (eg GST Payable, PAYG Instalments, FBT Payable etc)
  • Click on the Recalculate button at the bottom of the window to update/refresh the Cheque total

 

This then matches your ATO payment in full whilst correctly picking up/posting to all your liabilities, including payroll.  You can also enter separate line Memos to identify the components as well as a main Memo.

Hi Peter

I agree with John that you need to use the "Pay Liabilities" method for the above, however you don't need to create 2 separate transactions if you are paying multiple liabilities in one.

 

  • Generate the payment for the PAYGW component via "Create Custom Liability Payments"

This auto-populates the Liability Cheque with the PAYGW payable Payroll Item on that tab

  • Simply click on the Expenses tab & - on separate lines - select any other liabilities & their amount(s) in that payment (eg GST Payable, PAYG Instalments, FBT Payable etc)
  • Click on the Recalculate button at the bottom of the window to update/refresh the Cheque total

 

This then matches your ATO payment in full whilst correctly picking up/posting to all your liabilities, including payroll.  You can also enter separate line Memos to identify the components as well as a main Memo.

(Apologies for the double post - the Edit & Remove buttons are no longer there!)
(Apologies for the double post - the Edit & Remove buttons are no longer there!)
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Glenda Veale

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I have always thought that we had to enter BAS payments through the Pay Tax area.  This will save me a lot of hassle if I can do it this way.  Thank you.
Happy to help Glenda :)

The "Pay Tax" area is simply a pre-filling shortcut to "Write Cheque".  However, it should really be called "Pay GST" as when your BAS payment comprises ONLY of GST then yes, that is the correct way to enter it. 
The problem with "Write Cheque" though - as you've discovered - is that:
1.  It doesn't allow for selection of Payroll Items              ...... which then creates ....
2. Incorrect figures in your integrated BAS (this is because the W1 & W2 configuration labels are account-only options for selection, not Payroll Items.  The PAYGW liability has been accrued via a Payroll Item - The system doesn't include any Payroll Liability Payments at W2 as it recognises that type of transaction as being for payments against prior accrued liability amounts)

You will find your payroll liability accounts & W2 prefill are much more accurate if you use the Liability Cheque method when necessary. 
(Edited)