In this situation, two new wage categories need to be set up to replace the Base Hourly category. They will split the wage between the sacrificed amount and the net amount being paid to the employee. The Exclusions field outlined above cannot be used because the employee's wages vary from pay period to pay period, and therefore so would the amount needed to be excluded from Superannuation Guarantee calculations. However if the wage is split, the salary sacrifice portion can be excluded from Superannuation Guarantee contributions. In this example, the employee earns $20 per hour, is paid on a monthly basis, and wants to sacrifice 10% of their hourly rate each pay. Task 1 - Setup Base Hourly 90% Wages categoryThis category is created to calculate the 90% of the wages that is assessable income for taxation purposes. - Go to the Payroll command centre and click Payroll Categories.
- Click the Wages tab.
- Click New.
- Name the new category 'Base Hourly 90%'.
- Choose the Type of Wages as Hourly.
- Set the Pay Rate to Regular Rate Multiplied by 0.9000.
- Click Employee and apply the category to the applicable employee.
Task 2 - Setup Base Hourly 10% Wages categoryThis category is created to calculate the 10% of the wages that the employee is sacrificing. - Go to the Payroll command centre and click Payroll Categories.
- Click the Wages tab.
- Click New.
- Name the new category 'Base Hourly 10%'.
- Choose the Type of Wages as Hourly.
- Set the Pay Rate to Regular Rate Multiplied by 0.1000.
- Click Employee and apply the category to the applicable employee.
Task 3 - Setup Salary Sacrifice Superannuation DeductionThis category is created to deduct back out of the employee's pay the salary sacrifice superannuation amount. - Go to the Payroll command centre and click Payroll Categories.
- Click the Superannuation tab.
- Click New.
- Name the new category 'Salary Sacrifice 10%' or similar.
- Choose a suitable Linked Payable Account, for example Superannuation Payable.
- Select the Contribution Type as 'Salary Sacrifice (deduction)'.
- Set the Calculation Basis to Equals 10% Percent of Gross Wages.
- Click Employee and select the applicable employee for this new deduction.
- Click Exempt and select all Wage Categories that you do not want to be included in the Salary Sacrifice 10% amount.
Task 4 - Exempt the Superannuation Guarantee from calculating on the Base Hourly 10% Wages CategoryIn order to exempt the Superannuation Guarantee from calculating on the salary sacrifice amount, follow these steps: - Go to the Payroll command centre and click Payroll Categories.
- Click the Superannuation tab.
- Click the zoom arrow next to the Superannuation Guarantee (expense) category applicable to this employee.
- Click Exempt.
- Select the Base Hourly 10% Wage Category - this will make it exempt from Superannuation Guarantee contributions.
- Click OK.
Task 5 - Pay the EmployeeYou will notice that the new wage categories will show as well as the Base Hourly category. The two new categories will be used instead of the standard Base Hourly one. Zero the hours in Base Hourly (since you cannot deselect Base Hourly for an employee). Allocate the total hours the employee has worked to both new wage categories. This will correctly calculate the total amount of gross wages that is to be paid to the employee and the amount sacrificed will be deducted before PAYG Withholding tax is calculated. The Superannuation Guarantee will only calculate on the gross amount of wages less the salary sacrifice amount. UI Text Box |
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| - If any entitlements are currently set to calculate as a percentage of Gross Hours, ensure that the Base Hourly 10% wage category has been exempted using the Exempt button in the Entitlements Information window. If the entitlements are user-entered amounts, or set hours per pay period/month/year, it will not be necessary to amend them.
- If the employee above takes eight hours of annual leave for the month, the hours would be entered as follows:
- 8 hours of Holiday Pay
- 72 hours of Base Hourly 90%
- 72 hours of Base Hourly 10%
This assumes that the salary sacrifice does not apply to holiday pay amounts paid. If this is required, set up two holiday pay categories as shown above for the base hourly categories. |
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