Setting up a non-super Salary Sacrifice item for a salary package

Legacy KB ID: 5377

Question

How do I setup my payroll for a salary package where some salary items are not paid in cash, PAYG tax is paid only on the cash component but Super is calculated on the total salary package amount?

Answer

Reckon Accounts does not have a single function to handle non-cash salary package items where PAYG tax is paid only on the cash component but Super is calculated on the total salary package amount.

You will need to create two items to have Reckon Accounts calculate super on the salary package amount and PAYG on the cash component.

 

Create a Deduction – eg: SP Deduction1:

This item will deduct the amount from the earnings

·         Assigned to Payroll Liabilities:Salary Packaging;

  •  (It may be possible to direct this to component directly to another account – eg. SP Expense1 Recovered.  See your Accountant for directions)

·         Tax Tracking Type is Gross Payments;

·         Taxes are ticked;

·         Calculate based on Quantity is Neither;

·         Enter the amount of the lease.

 

Create a Company Contribution Item – eg Paid SP Deduction1:

This item will give back the deduction so that the correct Super is calculated

·         Liability Account is Payroll Expenses:Salary&Wages;

·         Expense Account is Payroll Expenses:Salary&Wages;

·         Tax Tracking Type is None;

·         Taxes are unticked;

·         Calculate based on Quantity is Neither;

·         Leave on Gross Pay;

·         Enter the amount of the lease;

·         Leave items in last window ticked.

 

Adjust your Super payroll item

·         Go to the last window Include payments in contribution;

·         tick the SP Deduction1 item and click Finish.

(Note:  if you wish to exclude this item from the Super Guarantee contribution, leave this item unticked).

Repeat these steps for each non-cash component in the salary packaging.

You are now ready to process your pay for this employee so that Super is paid on the total amount of the

Note:  For employee-initiated Super Salary Sacrifice, use the Salary Sacrifice option in the super payroll item

 

Clear the Payroll Liability account

Where the SP Deduction1 item was assigned to a Payroll Liability account, you must clear that item with other payroll liabilities.  You may need to utilize a Payroll Clearing Account and then use a General Journal to clear it back to another account to match the original business expenditure on the item.

 

Additional Information

Non-cash salary package items may attract Fringe Benefits Tax and may need to reported on the employee’s Payment Summary.  Please refer to your Accountant for direction. 

 

Need more help?

Ask the Reckon Community at: https://community.reckon.com/reckon.

 


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