Set up the required accounts

The steps below describe how to create 3 new three new accounts to track your Parental Leave (parental leave:

• a liability account

• (this is for the parental leave payments when you receive them from the government)
• an income account (this is to reflect the government's parental leave payments as income in your business reports - see task 8 for more info)
• an expense account (this is to track the parental leave payments you make to your employees)

Create a liability account

1. Go to the Accounts command centre and click Accounts List .
2. Click the Liability tab.
3. Click New. The Account Information window appears.
4. Enter an Account Number and Account Name which suits your account list. See our example below.
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   Here's our example:
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5. Click OK.

Create an income account

1. Go to the Accounts command centre and click Accounts List .
2. Click the Other Income tab.
3. Click New. The Account Information window appears.
4. Enter an Account Number and Account Name which suits your account list. See our example below.
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   Here's our example:
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5. Click OK.

Create an expense account

1. Go to the Accounts command centre and click Accounts List .
2. Click the Expense tab.
3. Click New. The Account Information window appears.
4. Enter an Account Number and Account Name which suits your account list. See our example below.
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   Here's our example:
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5. Click OK.

Create a new wage category

1. Go to the Payroll command centre and click Payroll Categories .
2. On the Wages tab, click New. The Wages Information window appears.
3. Change the Wages Name field to Paid Parental Leave .
4. For the Type of Wages , select the Salary option.
5. If you report payroll information to the ATO through Single Touch Payroll, select the applicable ATO Reporting Category. Typically this will be the same ATO Reporting Category you've selected for your Base Hourly or Base Salary wage categories. Learn more about assigning ATO reporting categories for Single Touch Payroll reporting.
6. Select the option to Override the Employees' Wage Expense Account .
7. In the Override Account field specify the Expense account that you expense account you created earlier. See our example below.
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8. Click Employee to select the relevant employees as shown in the following example.
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9. 
   Here's our example:
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10. Click Employee and select the employee(s) taking paid parental leave.
    Here's our example:
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11. Click OK.

Exempt paid parental leave from calculating superannuation

1. Go to the Payroll command centre and click Payroll Categories .
2. Click the Superannuation tab.
3. Click the zoom arrow next to your superannuation category.
4. Click Exempt.
5. Select the Paid Parental Leave wage category to exempt from the superannuation calculation.
6. Click OK.

Exempt paid parental leave from accruing entitlements

Hourly employees

For hourly employees the entitlement will not accrue as there are no hours to calculate the percentage. This seems contradictory, but normally hourly employees will accrue leave as a percentage of hours worked. While they are on Paid Parental Leave, they are being paid via a Salary Wage category, rather than an Hourly Wage category. Therefore having no hours on the paycheque means that no leave will accrue.

Salary Employees

Salary employees will need to have the Entitlement(s) deselected in their card. This is because generally these employees will be set to accrue a flat amount of hours per Pay Period/Month/Year, and unless the entitlement is deselected in their card, the entitlement will continue accruing throughout the period of their Paid Parental Leave.

To deselect the Entitlement(s):

1. Go to the Card File command centre and click Cards List .
2. Click the Employee tab.
3. Click the zoom arrow next to the relevant employee.

4. Click the Payroll Details tab and choose Entitlements.

5. Deselect any entitlements that should not be calculated during the Paid Parental Leave period.

   Note:

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   type note
   When the employee finishes the

   Paid Parental Leave you will

   paid parental leave you'll need to select these entitlements again so that the leave entitlements will accrue.

Pay the employee during their leave

You can add the amount to be paid each pay period into the employee's standard pay. This means when you complete a pay run, the right amount will be paid to the employee.

1. Go to the Card File command centre and click Cards List .
2. Click the zoom arrow next to the applicable employeethe employee taking paid parental leave.
3. Click the Payroll Details tab.
4. Click the Standard Pay option from the left-hand side.
5. Set all wage category amounts (except the Paid Parental Leave category) to zero.
6. Set the Paid Parental Leave category to the amount that is to be paid each pay period. See our example below.
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   Here's our example:
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7. Click OK.
8. Repeat steps 2-7 for all other employees for whom parental leave is applicable.

Receive the payment from the government

When the employer receives a parental leave payment from the government, this needs to be recorded as a Receive Money transaction into the Liability liability account created above.

1. Go to the Banking command centre and click Receive Money . The Receive Money window is displayed.
2. Specify the Amount Received.
3. On the first line, specify the Liability liability account ( created earlier ) in the Acct #No. field. In our example this is 2-1560 Parental Leave. See our example below.
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   Here's our example:
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4. Click Record.

Reset the employee's standard pay when they return to work

1. Go to the Card File command centre and click Cards List .
2. Click the zoom arrow next to the applicable employeethe employee.
3. Click the Payroll Details tab.
4. Click the Standard Pay option from the left-hand side.
5. Click Reset to Original Amountsas shown in the following example. Note in some software versions this button is located along the bottom of the window. .
   Here's our example:
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   The Paid Parental Leave payment will be removed from the employee's standard pay, and their normal Base Hourly or Base Salary will be reinstated.Image Removed
6. Click OK.

Record a clearing journal entry

Based on the setup described in this support noteabove, you will 'll need to record a journal entry (typically at the end of the financial year) to move the parental leave funds from your software's liability account to the income account. This will ensure the typically occurs at the end of the financial year, and it ensures the funds are accounted for correctly in your business reports.

However, this is based on the example setup described above, so you should speak check with your accounting advisor or the ATO to determine your business reporting requirements in regard to parental leave payments.

To record the journal entry:

1. Go to the Accounts command centre and click Record Journal Entry . The Record Journal Entry window appears.
2. Select the Tax Inclusive option.
3. On the first line of the journal, debit the parental leave value from the liability account created earlier (in our example this is 2-1560).
4. On the second line of the journal, credit the same parental leave value to the income account created earlier (in our example this is 8-1560). See our example below.
   
5. Click Record.
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   Here's our example:
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7. Click Record.