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Hi All, I'm wondering if MYOB can automatically accrue the liability for annual leave entitlements to the annual leave provision at each pay run. I have it set up to accrue the actual entitlement, and I can see what those entitlements are per employee, but I can't seem to get this to automatically accrue as an increase in the provision for annual leave. The only way around this seems to be a separate journal entry. Am I missing something here?
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There is no link between the Payroll module and any provision accounts that you may create on the Balance Sheet. The Entitlement Balance (Summary) Report gives you $$ for each type of Leave. You need to export it to excel and differentiate the different leave. For the first month this can be directly journalled into the account. From then on it needs to be the difference -this month minus last month. Investigate any large changes - they are generally some one has left or has taken a lot of holidays in the period.
It is my understanding that leave entitlements are not a tax deduction until paid.
A SME (Small Business Entity) would prepare a Special Purpose Financial Report and not a General Purpose Financial Report. A SME is defined as an entity with aggregated turnover less than $2 million.
The SME arena is my area of expertise.
Accounting Standards do require provision for leave liabilities for certain entities.
In twenty years, I have yet to see a Tax Agent prepare Leave Provisions for a SME.
As Ron, mentions it would be necessary to make a Journal Entry within MYOB.
It would then be necessary to do an increasing reconciliation in Part 7 of the Company Tax Return.
Let us know your thoughts.
As Ron said it needs to be done via a general journal, which once set up you can set to automatically remind you to do.
As Duncan also said, there is no tax deduction for this and that would be an adjusting entry via end of year entries, which will then get reversed on 1/7/xxxx so the business once again knows it liability for unused leave at any given time.
I have one client that pays out unused annual leave as at 30/6 every year, but also 'shuts' down the business for two weeks over Christmas which then satifies the OHS and Award requirements.
I also have other clients who have done a provision in the BS for both Annual leave/leave loading and sick/personal leave but didn't think re Long Service leave, so it all depends on how far with provisions you want to go and whether you just want to advise staff that they take at least two weeks each year and cash in the rest.
This though gets down to the award they are employed under and how much can be cashed out.
Help Article: Tracking leave accruals as liabilities goes through the process of what is required to in terms of showing those leave accruals as liabilities on a Balance Sheet with AccountRight. Please note that this is a manual process and will not automatically update those values.
Thanks everyone for the replies, much appreciated and clarifies the situation. I'll run with the journal entries.