SET UP PAYROLL ITEM FOR PERSONAL DEDUCTION ie items bought on company account

jennifer byrne
jennifer byrne Member Posts: 35
edited July 2020 in Accounts Hosted
When I set it up I put Salary and wages as the payroll liability. Is that correct?

Comments

  • JudyA
    JudyA Member Posts: 56 ✭✭✭
    edited July 2020
    Hi Jennifer,

    I have ours set up to go to a holding account (set up as a "Other Current Asset" account) as the liability account.  Quite often the personal deduction will be offset against an entry from a supplier bill, or credit card, which when I enter, I also put to the holding account.  The two entries then cancel each other out and I can reconcile the holding account.  I'd be careful of using a liability account linked to Salary & Wages, as it might throw out your figures.  I hope that helps.

  • jennifer byrne
    jennifer byrne Member Posts: 35
    edited July 2020
    Thanks Judy for your prompt reply. I know that it has thrown out the figures in P & L. I will have to get the accountant to fix
  • Linda ABC
    Linda ABC Accredited Partner Posts: 1,131 Accredited Partner Accredited Partner
    edited July 2020
    The safe way is to have your employee reimburse you for the personal expense completely outside of payroll - there are very strict rules and requirements about deducting funds from employees pay - it is often just safer and cleaner to have them pay you the funds directly rather than deduct from their pay.

    Refer to Section 324 of the Fair Work Act 2009 (CTH) provides that an employer may make a deduction from the employee's wages where the deduction is principally for the employee's benefit and is authorised in writing by the employee, with such authorisation specifying the amount of the deduction. However, an employee can withdraw at any time in writing. 

    Also see https://www.claytonutz.com/knowledge/2015/november/permitted-vs-illegal-deductions-when-can-an-emplo...
  • jennifer byrne
    jennifer byrne Member Posts: 35
    edited July 2020
    Thanks Linda. From now on I will not deduct but get him to EFT amount into the company account to pay for the items. I did read somewhere that because he gets the items cheaper using company account, it could be subject to FBT
  • Linda ABC
    Linda ABC Accredited Partner Posts: 1,131 Accredited Partner Accredited Partner
    edited July 2020
    That's another good reason to just keep it out of payroll altogether and just consider it staff discount when purchasing..  Cheers Linda