Pay Wages

Pay Wages functionality is used to generate payroll entries. It is not a fully-functional payroll system, but you can use it to generate employee payment entries common to insolvent entities.

Open the Pay Wages form from the Transaction > Employees > Pay Wages menu.

The system has an added payroll system so you may calculate and generate payroll entries.

Drill down to the employee details by double clicking on the employee. Change the units, wages, allowances, other, tax and super amountsin the calculation grid. Select the appropriate payroll accounts for the journal entries. A pay period of W5 represents a 5 day week.

PAYG and Superannuation are calculated based on marginal and system rates and financial entries are created by clicking Pay Wages. The rates are calculated based on formulas provided by the ATO, have cents truncated and are not straight equivalents of marginal rates that may be calculated based on the tax scales.

Entering Wages Entries

When you enter an Employee’s Weekly wage in the employee details form, the pay amount calculated in the pay wages entry form defaults according to the ‘To’ and ‘From’ wages period you enter.

The PAYG tax deduction is calculated based on the scale of marginal tax rates.

Employee drill down

You can drill down to each employee to edit their details.

Filtering the Wages

You can filter the wages grid to separate the payroll into pay runs for separate groups of employees. By entering a Payroll reference in the employee details form, you can filter the list of employees to appear.

Enter payroll reference ‘A001’, ‘A002’ and ‘B001’ into three separate employees. Enter the pay wages reference filter from ‘A’ to ‘A’ to filter the wages form to only display employees with a payroll reference beginning with ‘A’.

Wages Weekly Rate

If you enter the employee’s weekly rate, by entering a pay period, the wages amount will default to the proportional wages amount for the period.

Adding another pay type

You may want to separate overtime payments into a separate account so that you can default the normal wages amount then add additional overtime amounts, but also have these amounts included in the tax calculations.

To do this, add a separate payroll account for overtime and

Entering Deductions and other income

Here are some specific considerations for entering deductions.

The Pay Wages screen allows you to:

  • Deduct Child Support payments from an employee’s wages
  • Make deductions, for example Social Club
  • Make reimbursements of expenses.
  • Pay Mileage claims

Any employees in one wage period who have different reimbursements or deductions will need to be grouped together and done separately as there is only one place to enter a deduction or reimbursement.

For example, if two employees have child support deductions and two have social club deductions, they should be separated so they can be coded correctly on the Pay Wages window.

Child Support Payments

Child support payments are effectively post tax payments withheld from wages and then remitted to the Child Support Agency. Child Support payments do not reduce the PAYG or Superannuation liabilities.

The following details how to process a Child Support deduction:

To withhold child support payments:

  • Ensure you have a liability account called “Child Support Liability” to the chart of accounts. The account type should be set to “Other Current Liability”.

The screenshot below shows the new account entry form when adding the Child Support Liability account:

To deduct Child Support payments from an employee’s wage:

Add a new Pay type and select ‘Deductions: Withheld’
The expense account will be ‘Wages’ (although you can add a separate payroll expense account).
The withholding account will be ‘Child Support Liability’ from the WithholdingAccount dropdown.

Enter a negative figure from the amount under the Other (No Tax) as a negative figure

Example output entry for Child Support

The entry as a result of paying child support is as follows:

Salary Sacrifice

In version 2016.01:

You can see the when entering salary sacrifice the amount withheld does not reduce the Taxable Wages Amount

For every salary sacrifice you need to manually edit the taxable wages by the same amount:
Original Taxable Wages Amount:

Edit the amount and reduce the taxable wages.

A warning message, indicates the requirement to do this.

In version 2016.06:

The software automatically adjusts the Wages amount. All you need to do is enter the Salary Sacrifice amount (the software identifies the account to be marked for salary sacrifice treatment).

The Net wages will be adjusted to accommodate for the amount of salary sacrifice, which will in turn reduce the Tax amount and the SGC contribution.
Superannuation is calculated on the salary sacrifice amount.

Determining that an account is a salary sacrifice account.

You can nominate a payroll expense account to be a salary sacrifice account

Paying Allowances

You can pay allowances to an employee by allocating the entry lines to the correct account (from the Chart of Accounts) for the type of allowance.

When paying allowances you need to be specific about which type of allowances you are paying. The software’s default chart of accounts is set up with a range of the most common allowance types.

The allowance is set up as either “taxable” or “non-taxable” and to can be configured to “Show separately on the Payment Summary” depending upon the type of allowance:

You cannot allocate a payroll expense to the header “Allowances” account because this is not specific enough to be treated correctly for tax purposes. You need to use one of the sub accounts.

You may retrospectively edit entries paid to employees and re-code the amounts applicable for allowances and this will be reflected in PAYG Summary reports. The allowances are summarised on the Payslip report (located in the batch reports).

The tax treatment is discussed on the ATO link

Payroll Deductions

To enter deductions for expenses such as social club, you need to create an expense account, which is a non-payroll account, and select the dropdown box in the Pay Wages screen called Other Exp Account and enter a negative amount under the Other (No Tax) column.

Payroll Reimbursements

To enter reimbursement of expenses follow the same steps as entering a deduction, but enter a positive amount under the Other (No Tax) column.

Note:A separate Knowledge Base provides further details about how to use the Pay Wages function.

Annual Leave Accruals (Trading)

I have assumed you want to record the $ of annual leave accrued at each pay and record it when you are entering the Pay Wages.

Please create a Current Liability - Annual Leave Accrual and a Payroll Expense - Annual Leave Accrued.

Annual Leave Accrual Report

This payroll report calculates the accrued leave trading liabilities.

PaySlips

Once you have processed a pay, whether you pay through an approval batch or whether you pay straight to a bank account, the software creates a payroll batch. This allows you to group a payroll run together. You can view the payroll batch immediately after you process the payroll or retrospectively through the “Posted Payment Batches” tab.

From the batch reports you may print payslips.

The payslips have figures on year to date.

Future Changes

The following future items are current under development”

June 2016 Release

  • The ability to edit employee payments (not just dividends) and specifically configure the retreatment of payment summary classifications and amounts with in a transaction, such as Lump Sum A and ETP payments (for Leave and RILN).
  • FEG handling

Next Full Release (due end of 2016)

  • FBT Entry
  • Export / Import for wages
  • Import Payroll spreadsheet