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: Prior 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:

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Setting up the Withholding Account (Liability) 

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Pay wages

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

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

Before Salary Sacrifice is entered:



After the salary sacrifice has been entered:

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You will notice the reduction in Taxable Wages and Tax as well as an additional accrual journal for salary sacrifice.

Below is an example of the payment coding:

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NB: 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

Salary Sacrifice Other (non super)

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

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Create a liability account for Salary Sacrifice Other Withheld

 ssotherll.jpgssothel.jpg

 

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

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Example of payment coding

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Salary Sacrificed Super will report on STP.  Salary Sacrifice Other does not report on STP.

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Should Salary Sacrifice report at W1 on BAS?  No. Please refer to ATO link here

 

 

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