A purchased leave policy allows employees to increase their annual leave entitlements in exchange for sacrificing the equivalent salary value.
The employee pays for additional leave and then has the leave available to take in addition to the normal days.
1. To record Leave liability purchased by an employee
CR Leave purchased in advance (Asset Realisation account)
DR Purchase Leave Accrued (Other Liability)
2. To record Leave purchased when taken by an employee
DR Annual Leave (Wages with paid leave set) - allocated to the employee
CR Leave Accrued (Other Liability)
- Only cash transactions are reported to the ATO, so the second journal will need to be incorporated into a normal pay.
- A Payroll batch needs to be created to submit STP