How to enter wages entries having a Salary Sacrifice component

The system is designed to enter payroll transactions through the Pay Wages functionality. This is described in a separate knowledge base article:

https://exalt.zendesk.com/hc/en-us/articles/219378677-Detailed-help-on-different-aspects-of-Paying-Wages

When you pay a salary sacrifice component, the effect of the transaction is to reduce the taxable income by the amount of salary sacrifice, and, in turn, also reduce the amount of tax payable calculated on the total taxable income. If the salary sacrifice is for super, then the amount is accrued as a component of super payable that is then remitted to the nominated super fund.

Note

to January 2020, the amount the employer paid for SGC was reduced by the salary sacrifice amount. Now, the amount of the SGC is based on the total OTE wages including salary sacrifice component.

See the ATO website on reportable super: https://www.ato.gov.au/Business/Super-for-employers/In-detail/Salary-sacrifice/Reportable-employer-super-contributions---for-employers/?page=4

When using the Pay Wages, there are several aspects to a salary sacrifice entry:

1. The software identifies the account to be marked for salary sacrifice treatment
2. The software automatically reduces the Taxable Wages amount, by the amount of the Salary Sacrifice entered
3. The Net wages is automatically adjusted to accommodate for the amount of salary sacrifice, which will in turn reduce the Tax amount.

Salary Sacrifice Super - Account Setup

Setting up the payroll expense account for Salary Sacrifice of super is as follows:

 

Setting up the Withholding Account (Liability). STP2 pay type is <N/A> because this account is not reportable on the STP2 submission

Pay wages

The following example shows how to set up Pay Wages to accommodate for a salary sacrifice component.

Pay Type: Deductions: Withheld
Expense Account: Wages & Salaries: Salary Sacrifice Super (trading)
Withholding Account: Super Control (Trading): Salary Sacrifice Withheld

Emp1 Payment with Salary Sacrifice Super. The Wages amount is reduced by the Salary sacrifice and the Tax amount is recalculated accordingly.

Emp2 Payment without Salary Sacrifice Super.

Below is an example of the payment coding:

Note: A change was introduced on 1 January 2020. SGC super is calculated on the Pre salary sacrifice Taxable wages. You can find more on this here

STP2 Payment Summary

NB An update was made in v5.8.32 to report Gross (before Salary Sacrifice) in Gross column as per ATO instruction in link here

Payment of Salary Sacrifice Super is paid from the Liability (Other) account Super Control (Trading) - Super Paid (received).  This account is not reportable on the STP2 submission. STP2 pay type is <N/A> because this account is not reportable on the STP2 submission

NB Payments from this account are not allocated to employees.

Salary Sacrifice Other (Non Super)

Setting up the Payroll Expense account for Salary Sacrifice Other than super is as follows:

Create a Salary Sacrifice Other Control liability account with sub accounts for Salary Sacrifice Other Withheld and Salary Sacrifice Other Paid as per below

Salary Sacrifice Other Control Account. STP2 pay type is <N/A> because this account is not reportable on the STP2 submission

Salary Sacrifice Other Withheld Account. STP2 pay type is <N/A> because this account is not reportable on the STP2 submission

Salary Sacrifice Other Paid Account. STP2 pay type is <N/A> because this account is not reportable on the STP2 submission. 

NB Payments from this account are not allocated to employees.

The Pay wages table is setup as per below

Pay Type: Deductions: Withheld
Expense Account: Wages & Salaries: Salary Sacrifice - Other
Withholding Account: Salary Sacrifice Other Withheld

The Wages amount (originally $2,000) is reduced by the Salary sacrifice ($200) and the Tax amount is recalculated accordingly. Super is unchanged.

Example of payment coding

Salary Sacrificed Other will report on STP2.

NB An update was made in v5.8.32 to report Gross (before Salary Sacrifice) in Gross column as per ATO instruction in link here

NB Salary Sacrifice is not reported at W1 on the BAS. Please refer to ATO link here