Superannuation Salary Sacrifice

SUPERANNUATION SALARY SACRIFICE

To manage Superannuation Salary Sacrifice for your staff, you will need to set up two separate payroll items, one a Super Type item and the other, a Company Contribution type item.

Step 1 Set up the Superannuation Contribution payroll item

The Superannuation Contribution

Create a new payroll item as a Superannuation Contribution type called Salary Sacrifice – (name of specific type of sacrifice)”, ie. Salary Sacrifice - HESTA Super.

Click [Next].

Choose the Superannuation type as Salary Sacrifice (SS) here.

Click [Next].

Choose the agency you will be paying the deduction to – That is the Superannuation Fund (such as HESTA Superannuation Fund)

Enter your Employer number with the Superannuation fund (if and only if you have been given one). Note this is NOT the employee’s member number.

Open the Liability account drop-down listand choose your Salary Sacrifice Liability Account (ie: Payroll Liabilities: Salary Sacrifice Super

(Set this account up as an “Other Current Liability” in the Chart of Accounts if you have not already done so.)

Click [Next].

Choose Gross Payments in the Tax TrackingTypewindow. This is done to reduce the Taxable amount showing in Gross Payments on the Payment Summaries.

Click [Next].

Tick the PAYG Tax item (This is done to reduce the tax on gross wages (and the whole point of a Salary Sacrifice is usually to reduce the tax paid)).

Click [Next].

Leave the Calculate based on qty as it is (without a tick).

Click [Next].

In the next window enter a default amount, or percentage or leaveit blank. If this item will be used for more than one employee it is usually best to leave it blank as the amount of the salary sacrifice would usually vary for each employee.

Click [Next].

In the last window, if you chose a percentage in the last step then you need to tick the items that the percentage needs to be calculated on. ie. If the Salary Sacrifice is for 30% of the ordinary hourly wages then you would need to tick for example, the Hourly Pay item, the Holiday Hourly item and the Sick Hourly item).

If in the last step you left it blank or chose a default amount it doesn’t really matter what is ticked in here. You would generally just leave it as the default.

Click[Finish].

Step 2Set up the Company Contribution item.

Create a new Payroll Item as a Company Contribution type and call it something likePaid Sal SacrificeAmt – (Superfund name) ie. Paid Sal Sacrifice Amt – Hesta

Click [Next].

Assign the agency to which the sacrifice is to be paid. ie. HESTA Superannuation

The number can be left blank

Assign the liability account to your Wage expense account in your Chart of Accounts ie. Payroll Expenses: Gross Wages

Assign the Expense account to an expense account for Salary Sacrifice, set up in your Chart of Accounts as a sub account of your Payroll expenses header account ie.Payroll Expenses: Salary Sacrifice Expense.

Click [Next].

The Tax Tracking Type is set to None.

Click [Next].

The PAYG Tax (and State Payroll Tax) is left UNTICKED

Click [Next].

Leave the Calculate based on qty as Neither

Click [Next].

In the Gross vs’ Net window select to calculate on Gross Pay

Click [Next].

The default amount is set to the same value as the Super item (if any).

Click [Next].

Leave the default ticks in the Include payments in contribution as this will have no effect.

Click [Finish].

Step 3Set up an employee card with Salary Sacrifice

To modify an employee’s pay to include salary sacrifice, display the Employee Centre

Double-click to edit the employee(s) who have salary sacrifice (one at a time) and click on the Payroll and Compensation Info tab.

In the Additions, Deductions and Company Contributionsbox addthe Paid Salary Sacrifice Amount– (superfund name) item that you set up in Step 2.

If you have not put default amounts during the item setup you will need to add the salary sacrifice amount in the Amount column next to the item. (ie. The $55.00 amount in the fig below.

Then open the Super Details tab and add a Super Item. Choose the Salary Sacrifice Superannuation Item you set up in Step 1.

With the Salary Sacrifice Super item highlighted, record the details of the deduction including the Rate (ie. $55.00), the Employee Member number, and the Super Fund Scheme name.

Click [OK] to save and close.

Step 4Paying an employee with Salary Sacrifice

Start your Pay run as usual

While in the Open Paycheque detail screen you will see the added items in the Other Payroll Items window (as in the figure below)

The amounts will be as per the amounts you set in the Employee Card. You can override the defaultsettings on your employee’spay preview screen to reflectthe desired amount orpercentage to be withheld for the current pay if you need to.

The SGC (Superannuation Guarantee Charge super) calculateson the original GrossWages in this example. Strictly speaking though superannuation SGC does not have to be paid on the Sacrificed amount. Employers can choose to pay it on the whole amount if they wish as in this example.

Record the pay as per usual