Payroll items not appearing 'below the line' in the payroll summary

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Hi - We're using Reckon desktop (Accounts Premier - Professional Services Edition 2018) and I cannot set up a non-taxable allowance Payroll item so that it appears 'below the line' in the Payroll Summary, ie it is not included in the taxable payroll calculations.  The payroll item is set up as not being subject to PAYG.

Any ideas what needs to be changed so this payroll items appears in the correct area of the Payment Summary?

Thanks
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Wendy Phelps

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Posted 3 weeks ago

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Robert Smeallie

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Hi Wendy

That sort of item is called a Fringe Benefit and the employer is required to pay Fringe Benefits tax for that allowance, not the employee. It's to stop employers getting around the PAYE tax system by using payments outside the normal payroll system.

The allowance needs to be made a Fringe Benefit and is not included in the taxable income.

Robert Smeallie
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Wendy Phelps

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Thanks Robert - apologies as I didn't provide sufficient information - this payroll item is a reimbursable amount in line with the ATO's reasonable limit and I understand not subject to either PAYG or FBT.

Thanks
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John Graetz

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HI Wendy.  My question to you is, if these are reimbursements, why are they going through Payroll in the first place?  Or, if it is something like a non taxable Living Away from Home Allowance, it could be that you need to set the Tax Tracking type to NONE.  This may be something to take up with your Accountant.

John L G

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Wendy Phelps

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Hi John

These mileage reimbursement are more easily managed with the payroll rather than needing to make separate payments - our accountant has informed us that these payments need to be allocated as 'car allowances' for STP purposes.

Thanks

Wendy
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John Graetz

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Hi Wendy.  If these are Motor Vehicle Travel Allowances, paid on a cents per km basis (which you seem to indicate that they are), they would be set up with a Tax Tracking type of Allowances (there are a number of options for which allowance type you select e.g. Travel or Other). If the allowance paid is greater than 66 cents per km, the first 66 cents does not have to be taxed (but it is still taxable income - it would appear in the lower section of your Payroll Summary). Any amount in excess of 66 cents is required to be taxed and it would then appear in the upper section of the Payroll Summary.

John L G

(Edited)
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Wendy Phelps

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That is exactly my problem John - it is the car allowance paid in line with the ATO limit, ie 66 cents - this is appearing in the upper section of the Payment Summary right underneath to 12 cents per Km we pay to accord with the Award rate and which is subject to PAYG.  Therefore both the taxable and non-taxable allowances are appearing in the upper section of the payment summary.

Thanks

Wendy
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John Graetz

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Wendy.  For the Taxes "page" have you removed the tick against PAYG Tax?  That is what places it to the bottom section of the Payroll Summary.

John L G

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John Graetz

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Wendy, just to clarify.  Earlier you spoke of Payroll Summary, but in the latest post you mentioned Payment Summary.  I take it you mean Payroll Summary.  My non-taxable MV item is set up as Allowances - Other with PAYG Tax blank and this has worked perfectly for me for years with this appearing in the lower section of the Payroll Summary.  Give me a ring on 0428 695454 if you like and we can go through it.

John L G

 

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John Graetz

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Wendy.  Do you have the Payroll Item type as an Addition?

John L G

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Wendy Phelps

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Hi John - there are no taxes selected for this payroll item and I expected that this would be the determining factor in where items are shown in the Payroll Summary (yes I do mean Payroll Summary - sorry about that).  I may give you a call tomorrow if that is suitable John?

Thanks

Wendy
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Wendy Phelps

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Yes John, this item is set up as an addition.

Thanks

Wendy
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John Graetz

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Not sounding too good at the moment Wendy - sounds rather weird.  Yes, tomorrow will be fine.

John L G

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Wendy Phelps

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Yes it has me stumped John...........
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Wendy Phelps

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Hi again John - I ran a verify and then a re-build and set up a new payroll item (which was exacting the same as the 'old' payroll item which wasn't being reflected in the correct section of the payroll summary report) and the 'new' payroll item is formatting correctly 'below the line'.  I have edited the M/V reimbursements already processed this financial year using the 'new' payroll item and everything is now formatted correctly in the payroll summary.  Many thanks for your assistance John.
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John Graetz

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Very pleased that we were able to get this strange aberration solved Wendy.

John L G