Salary Sacrifice - Payroll Setup (not using SuperStream)
The Salary Sacrifice Contribution is deducted from the employee's gross pay, that is, before PAYG withholding tax is calculated. It reduces the employee's gross taxable income.
To setup Salary Sacrifice as a new Payroll Pay Rate item not using SuperStream:
Step 1. Add Pay Rates
- Click on the Payroll icon on toolbar button.
- Click on the Setup Lists tab.
- Click on Pay Rates tab.
- Click on the Add button.
- Fill out the details for:
- Name: Salary Sacrifice.
- Per: Leave blank.
- Hrs/Units: Leave blank.
Rate: Leave blank.
Note: Per, Hrs/Units, Rate may vary between employees. These can be set up individually for each employee.
- Tick Taxable check box.
- In the Optional Cashbook Account box, click on Include with wages radial dial to select.
- Tick the Reportable Employer Super Contributions check box.
- Click on the OK button.
To set up Salary Sacrifice as a new Wages/Salary Pay Type for an Employee:
Step 1. Select Employees Tab
Step 2. Complete the Pay Rates
Step 3. Add a New Wages/Salary Item
- In the Add a new Wages/Salary Item window, fill in the following details:
Name: select Salary Sacrifice from the drop down list.
Per: click on the drop down arrow to select an option. e.g. Pay.
Hrs/Units: e.g. 1, as we are opting for a nominated amount per pay.
Rate: e.g. -200 ENTER THIS AMOUNT AS A NEGATIVE
Taxable check box should be ticked.
Optional Cashbook Account is Include with wages.
- Click OK button to save.
Note: For this example - The employee's (John Brown) Gross Pay will be reduced by $200 , thus the amount of PAYG Withholding Tax will also be reduced, as it is calculated on the reduced Gross amount ($700). Super will be calculated on the original Gross amount ($900).
- Default Pay Rates for Wages/Salary screen should now look like this:
Article ID 1650