How to pay a charity using pre-tax pay with Reckon One?

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  • Updated 6 months ago
one of my employee want me to pay the current pay period's pay into a charity. I need to pay it pre-tax but I don't know how to do using Reckon One, Any one can help? Thanks
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Jeannie

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Posted 6 months ago

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Kevin Russell, Accredited Partner

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You can't just pay it pre tax. It doesn't work that way. There are specific rules around salary sacrifice. NFPs have different rules to public benevolent institutions. You probably need to consult a tax specialist
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Charles van Rotterdam

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Agree with Kevin; effectively he's making a donation to a Charity; I'd just enter it as a normal pay, where it goes doesn't matter but if you want to separate it then it must be seen as a deduction not salary sacrifice. I wouldn't necessarily bother, it's effectively like his wage is going into 2 separate bank accounts. As a donation to a charity he might be able to claim it back on his tax providing the charity is a Deductible Gift Recipient (DGR) and provides a receipt.
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Linda Putland, Accredited Partner

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Jeannie - have a read of this link to the ATO and see what situation might best apply to this instance?  https://www.ato.gov.au/non-profit/gifts-and-fundraising/workplace-and-business-support/workplace-giv...

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Charles van Rotterdam

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I was just thinking something along similar lines; whose tax issue would it be. But it clears it up; it can be done Salary sacrifice but it is then the employer that claims the Tax deduction for a DGR gift providing of course that he's a for profit entity. If the employer is an NFP then there is no point.