BSBFIA302A/BSBADM308A Process Payroll

BSBFIA302A/BSBADM308A Process Payroll

Contents

Section 1 Introduction

Terms of Employment 1

PAYG Withholding Tax 1

Tax Offsets 2

Voluntary Deductions 2

Payment 2

Superannuation Guarantee 2

Holiday Pay 3

Section 2 Manual Payroll

Activity 1—Nappy Days 4

Clock Cards 5

Calculating the Pay 6

Change Analysis 10

Cheque and Change Docket 10

Payment by Direct Deposit and Cheque 10

Payslips 12

Activity 2—Bright Buttons 15

Direct Debit Payment Schedule 21

Activity 3—Dogs on the Run 24

Holiday Pay Calculation 27

Activity 4—Colouring World 39

Activity 5—Westerway Ceramics 48

Introduction

Processing a payroll involves the calculation, preparation and payment of salaries and wages to employees. It also involves calculating related employer expenses.

Terms of Employment

§  Full time – employee receives full weekly payment at the normal full time rate..Entitlements are those available for working a full week eg sick pay, holiday pay

§  Part time – employee works a regular number of hours each week at an hourly equivalent of the normal full time rate. Receive benefits of a full time employee at a pro rata rate.

§  Casual – employee works on an hourly or daily basis at a rate higher than the normal full time rate. The rate is higher to compensate for the employee not being eligible for full time entitlements.

§  Piecework – employee is paid for work produced

§  Commission – amount of pay is directly related to the value of the work done

§  Bonus/allowance – amount paid made in addition to normal payment as recognition of performance

Salary or wage?

§  Salary – payment is calculated on a yearly basis regardless of the number of hours worked. Can be paid weekly, fortnightly or monthly.

§  Wage – paid on an hourly basis for a fixed number of hours per week eg 40 hour week. Hours worked beyond normal hours are paid at an additional overtime rate.

PAYG Withholding Tax

A tax file number is issued by the Australian Taxation Office to an individual once an application is lodged. An employee is required to give this tax file number to their employer so that the correct amount of tax can be deducted from the employee’s pay.

When an employee commences work, they are required to complete a tax file number declaration form that provides the employer with information such as their TFN and if the employee wants to apply for a rebate on their tax or claim the tax-free threshold. The tax free-threshold, currently $6,000, can be claimed from one current employer only.

The amount of tax to be deducted is calculated using a PAYG Withholding Tax Weekly Schedule. This is available from a newsagency or can be downloaded from the ATO website.

You should now download a copy of the tax tables to your USB memory stick.

To determine how much tax must be withheld using the schedule:

§  Column 1 – employees’ total weekly earnings

§  Column 2 – employee claims tax free threshold and is entitled to

leave loading (ie full-time)

§  Column 3 – employee claims tax free threshold but is not entitled

to leave loading (ie casual)

§  Column 4 – no tax free threshold

§  46.5% of the gross wages must be withheld if no tax file number is provided.

Once calculated, the tax is deducted from an employee’s gross pay and is forwarded by the employer to the ATO (usually monthly). At the end of the financial year, a PAYG Summary is prepared showing the total tax deducted and the gross amount of earnings for the year.

Tax Offsets (formerly rebates)

The amount of income tax paid can be reduced by specific tax offsets (rebates) that an employee may be eligible to claim. The main ones include:

§  Spouse (no dependent children) - $2,243* - $43.00

§  Parent, spouse’s parent - $1645.00 - $31.00

§  Invalid relative - $823 - $15.00

§  Housekeeper/child housekeeper – no dependent children $1,828* - $34.00

–  dependent child(ren) $2,190* - $42.00

These can be claimed over the 52 weeks as a weekly reduction in tax or as a lump sum in a tax return completed at the end of the financial year.

(* current figures – these figures are maximums and can be reduced by separate net income (sni))

Voluntary Deductions

Employees can nominate to have their employer pay some of their regular bills directly from their after-tax earnings. Examples include additional superannuation payments, trade union subscriptions, savings plan contributions and health insurance. The employee needs to provide their employer with the necessary details.

Payment

Employees can receive their payment either:

§  as a direct deposit to a nominated bank account

§  by cheque

§  by cash

What is the Superannuation Guarantee?

§  Superannuation contribution that an employer must make on behalf of any employee that earns over $450.00 per month

§  It is calculated currently at a rate of 9% of gross income

§  It is an expense to the employer and does not affect an employee’s earnings

§  Payment can be made to the employer’s fund or alternatively the contribution can be made to a fund nominated by the employee

Holiday pay

§  Holiday pay is based on the number of hours worked in a normal working week.

§  If an employee is entitled to annual leave loading it is calculated at a percentage (17.5%, 20%, 25%) of the normal weekly wage and added to the gross holiday pay amount.. The percentage changes within different industries dependent on the agreement which the employees work under.

§  Taxation to be withheld is based ONLY on the weekly GROSS amount unless the loading is greater than $320.00. Then, only that portion of the loading over $320.00 is added to the gross amount to calculate the tax.

Nappy Days P/L

Company Policy:

Nappy Days pay a weekly wage to all employees. They are required to work a 35 hour week. Time-and-a-half is paid for overtime on weekdays, double time for work done on Saturdays and Sundays are paid at triple time.

The Employees:

Name / Hourly Rate / Normal Hours / Tax File Number Provided / Tax Free Threshold Claimed / Tax Offset (rebate) / Super-annuation / Savings Plan / Trade Union / Health Fund
Billy Boston / 25.00 / 35 / Yes / Yes / 100.00 / 18.00
Sally Grasso / 20.00 / 35 / Yes / Yes / Spouse / 5.00 / 10.00
Julie Jenkins / 25.00 / 35 / Yes / No / 5.00
Matt Morris / 25.00 / 35 / No / 5.00 / 8.00
Tan Myas / 15.00 / 35 / Yes / Yes / Invalid Relative / 25.00 / 5.00 / 5.00 / 10.00

The Working Week

Each employee records their starting and finishing times for each day they work on a CLOCK CARD or time sheet. At the end of the working week this information is collected and the time worked at the normal hourly rate and the hours that must be paid at overtime rates determined.

Complete the clock cards for the employees of Nappy Days P/L for the week ending 21/7.

NAPPY DAYS P/L CLOCK CARD No. 1
NAME: Billy Boston PERIOD ENDED: 21/7
START / STOP / START / STOP / NORMAL HRS. / O/T HOURS
Monday / 0800 / 1100 / 1130 / 1530
Tuesday / 0800 / 1130 / 1200 / 1530
Wednesday / 0800 / 1200 / 1230 / 1530
Thursday / 0800 / 1200 / 1300 / 1600
Friday / 0800 / 1200 / 1300 / 1600
Saturday
Sunday / 1000 / 1500
Totals:
NAPPY DAYS P/L CLOCK CARD No. 2
NAME: Sally Grasso PERIOD ENDED: 21/7
START / STOP / START / STOP / NORMAL HRS. / O/T HOURS
Monday / 0700 / 1100 / 1200 / 1500
Tuesday / 0700 / 1100 / 1200 / 1500
Wednesday / 0700 / 1100 / 1200 / 1500
Thursday / 0700 / 1100 / 1200 / 1800
Friday / 0700 / 1100 / 1200 / 1500
Saturday / 0900 / 1300
Sunday
Totals:
NAPPY DAYS P/L CLOCK CARD No. 3
NAME: Julie Jenkins PERIOD ENDED: 21/7
START / STOP / START / STOP / NORMAL HRS. / O/T HOURS
Monday / 0900 / 1300 / 1400 / 1700
Tuesday / 0900 / 1300 / 1400 / 1700
Wednesday / 0900 / 1300 / 1400 / 1700
Thursday / 0900 / 1300 / 1400 / 2100
Friday / 1000 / 1300 / 1400 / 1800
Saturday / 1300 / 1700
Sunday
Totals:
NAPPY DAYS P/L CLOCK CARD No. 4
NAME: Matt Morris PERIOD ENDED: 21/7
START / STOP / START / STOP / NORMAL HRS. / O/T HOURS
Monday / 0800 / 1200 / 1300 / 1600
Tuesday / 0800 / 1200 / 1300 / 1600
Wednesday / 0800 / 1200 / 1300 / 1600
Thursday / 0800 / 1200 / 1300 / 1800
Friday / 0800 / 1200 / 1300 / 1600
Saturday
Sunday
Totals:
NAPPY DAYS P/L CLOCK CARD No. 5
NAME: Tan Myas PERIOD ENDED: 21/7
START / STOP / START / STOP / NORMAL HRS. / O/T HOURS
0900 / 1230 / 1330 / 1700
Tuesday / 0900 / 1230 / 1330 / 1700
Wednesday / 0900 / 1230 / 1330 / 1700
Thursday / 0900 / 1230 / 1330 / 1700
Friday / 0900 / 1230 / 1330 / 1700
Saturday
Sunday
Totals:

YOU MUST CHECK THE HOURS YOU HAVE CALCULATED WITH THE ANSWERS AND MAKE ANY CORRECTIONS BEFORE CONTINUING

Calculating the Pay

To calculate the pay due to each employee for the time worked during the week, a WAGES CALCULATION CARD is completed.

1.  Transfer the total hours worked at normal time for the week into the first row in the Actual Hours column. Then transfer the overtime hours into the appropriate row in the actual hours column.

2.  Extend the actual hours of overtime into the Adjusted Hours column by multiplying the actual hours worked by the overtime rate (1.5, 2 or 3). Multiply normal hours and the adjusted overtime hours by the hourly base rate of pay to find the dollar value of each item, and insert this in the 'amount' column.

3.  Add the figures in the 'amount' column and insert the total in the GROSS PAY row.

4.  Using the PAYG Withholding Tax Weekly Schedule find the PAYG income tax that must be deducted and insert the tax as indicated in the wages calculation card. To find the appropriate amount for each employee you need to refer to the employee’s information.

5.  Enter total offsets (rebates) and deduct from the tax.

6.  Refer to the employee information for details of voluntary deductions and enter on the wages calculation cards.

7.  Total the Deductions for each employee, insert as indicated, and subtract total from the gross pay. The result is the NET PAY, which is the amount of money the employee will actually receive as their pay.

Complete the wages calculation cards for the employees of Nappy Days P/L for the week ending 21/7.

NAPPY DAYS P/L - WAGES CALCULATION CARD Week Ending: _21 / 7_
NAME Billy Boston HOURLY BASE RATE: $
ACTUAL HOURS / ADJUSTED HOURS / AMOUNT
Normal time
Time-and-a-half
Double time
Triple time
Sick Pay
GROSS PAY
DEDUCTIONS
PAYG Tax
LESS Rebate
NET Tax deducted
Superannuation
Savings Plan
Trade Union
Health Insurance
TOTAL DEDUCTIONS
NET PAY
NAPPY DAYS P/L - WAGES CALCULATION CARD Week Ending: 21/_7_
NAME Sally Grasso HOURLY BASE RATE: $.
ACTUAL HOURS / ADJUSTED HOURS / AMOUNT
Normal time
Time-and-a-half
Double time
Triple time
Sick Pay
GROSS PAY
DEDUCTIONS
PAYG Tax
LESS Rebate
NET Tax deducted
Superannuation
Savings Plan
Trade Union
Health Insurance
TOTAL DEDUCTIONS
NET PAY
NAPPY DAYS P/L - WAGES CALCULATION CARD Week Ending: 21/ 7_
NAME Julie Jenkins HOURLY BASE RATE: $ .
ACTUAL HOURS / ADJUSTED HOURS / AMOUNT
Normal time
Time-and-a-half
Double time
Triple time
Sick Pay
GROSS PAY
DEDUCTIONS
PAYG Tax
LESS Rebate
NET Tax deducted
Superannuation
Savings Plan
Trade Union
Health Insurance
TOTAL DEDUCTIONS
NET PAY
NAPPY DAYS P/L - WAGES CALCULATION CARD Week Ending: 21/ 7
NAME Matt Morris HOURLY BASE RATE: $ .
ACTUAL HOURS / ADJUSTED HOURS / AMOUNT
Normal time
Time-and-a-half
Double time
Triple time
Sick Pay
GROSS PAY
DEDUCTIONS
PAYG Tax
LESS Rebate
NET Tax deducted
Superannuation
Savings Plan
Trade Union
Health Insurance
TOTAL DEDUCTIONS
NET PAY
NAPPY DAYS P/L - WAGES CALCULATION CARD Week Ending: 21/ 7_
NAME Tan Myas HOURLY BASE RATE: $
ACTUAL HOURS / ADJUSTED HOURS / AMOUNT
Normal time
Time-and-a-half
Double time
Triple time
Sick Pay
GROSS PAY
DEDUCTIONS
PAYG Tax
LESS Rebate
NET Tax deducted
Superannuation
Savings Plan
Trade Union
Health Insurance
TOTAL DEDUCTIONS
NET PAY

Change Analysis

Where wages are to be paid in cash, a CASH ANALYSIS TABLE needs to be completed so the correct quantity of each denomination of notes and coins to be used in paying the staff can be determined.

Usual policy in paying employees with cash is to use the minimum number possible of each denomination, but not to use $100 notes except for holiday pay or amounts above $500.

You complete the cash analysis table by first inserting the names of the employees and the net pay of each. Then, beginning with the first employee, you insert the value of the maximum number of $50 notes you can use in this pay, and make up the remainder with the highest denomination notes and coins possible, inserting the value of each as indicated.

The Cheque and Change Docket

When several employees are being paid in cash, it is usual for one cheque to be prepared for the total of the net wages. The cheque is made out to CASH and is taken to the bank accompanied by a CHANGE DOCKET, which explains how the cash is to be split up. The information for the change docket is obtained from the cash analysis table, and the total on the docket should equal the total net wages on the table.

Payment by Direct Deposit and cheque

The most commonly used method for paying employees is that of Direct Debiting an employee’s bank account via an electronic funds transfer. For this method it is important that details of an employee’s BSB and Bank account number are collected, recorded, and filed maintaining the Organisation’s policies and procedures.