Salary sacrifice and STP

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  • Updated 5 months ago
I deal with Not for Profits and many employees take advantage of Salary Sacrifice options. 

I haven't yet seen any reference to dealing with SS in the STP set up.  Will we have the option to use adjusted Gross Wage in the STP report?  How will the ATO know the gross up rate for the SS amounts that we currently need to use for inclusion in the Payment Summaries?
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Trish Thornthwaite

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Posted 6 months ago

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John Graetz

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HI Trish.  What amounts/items are you including on your Payment Summaries?  If you are talking about Reportable Fringe Benefits, that should only relate to the items which are included in your Annual Fringe Benefits Tax Return to 31st March.  That is the only place where gross up amounts are applicable.

John L G 

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John Graetz

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Hi Trish.  Don't know why your response is not showing here unless you have deleted it.  Reportable Fringe Benefits are not related to Payroll as such as the salary sacrifice deductions are already accounted for within Payroll and subsequent reporting to the ATO.  Reportable Fringe Benefits are a "notional" amount, recorded on pay slips if the taxable value is in excess of $2,000 and such benefits might not even have had anything to do with salary sacrifice e.g. a car provided to an employee.  They are a non-value item within Reckon's payroll.  They have nothing to do with an employee's gross earnings from an ATO perspective as FBT has been paid on them.  Rather they are reported for the use of other Government Agencies etc who might be involved in making social security payments etc.

John L G

(Edited)
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Trish Thornthwaite

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John, I guess my question is really, how Reckon has set up STP to deal with the options provided in this ATO information?

You can report an employee's reportable fringe benefit amount (RFBA) or a reportable employer superannuation contribution (RESC) through Single Touch Payroll.
You only report RFBA amounts if the total taxable value of certain fringe benefits you provided to your employee exceeds $2,000 for the fringe benefits tax year (1 April to 31 March).
The following information needs to be reported for RFBA or RESC:
You may provide year-to-date RFBA and RESC through a pay event (if the information is available in payroll) throughout the financial year.
You may provide year-to-date RFBA and RESC through an update event throughout the financial year.
Once you’ve reported an amount, you should continue to report the amount in all following pay events, even if the year-to-date amounts remain the same. You may report these amounts through an update event. This can be before or when you make the declaration that you have finalised your reporting for that employee for the financial year.
If you cannot (or choose not to) provide RFBA or RESC through Single Touch Payroll, you must provide this information on a payment summary and provide us with a payment summary annual report. The payment summary must not include amounts reported through Single Touch Payroll.
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John Graetz

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Trish.  I am not yet into STP.  But I make the following comments.
1.  I presume (but do not know for sure) that there is no threshold amount applicable to RESC.  I cannot readily find anything on the ATO website which mentions this.  As RESC is a value transaction on a pay run, it would seem logical to me that it can be reported through STP on a pay by pay basis.
2.  Up to now, RFBA has only had to be assessed once the annual FBT return has been lodged after 31 March.  As you say, there is a threshold of $2,000 below which it does not have to be reported.  This amount is a non value end of year transaction through Payroll, purely to get the amount to appear on the annual payment summary.  It does not seem logical to me to be trying to report this through the year via STP.  To me it would seem to be horrendous to have to calculate the grossed up amounts each pay day for benefits which have actually been paid, as distinct from amounts which have been salary sacrificed from a pay - they are two totally different things. In what you have stated above, there is an option to report as a one-off event.
I repeat that I am not yet required to report through STP, so my knowledge of STP is limited.
John L G