If your employees work under a building industry award which indicates that superannuation is payable as a flat amount or 9.5% of gross wages (whichever is greater), this article explains a way to set up your AccountRight payroll to achieve this.
As this example, an employee is paid fortnightly and the minimum superannuation required for this frequency is $95.00. For more information on the minimum amount of superannuation required in your situation, check the relevant industry award or check the ATO website.
This article is provided for guidance only - it might not be suitable for your business requirements. If you need clarification, check with your accounting advisor or post your question below.
Task 1 - Create a new superannuation category to generate the minimum superannuation payment
- Go to the Payroll command centre and click Payroll Categories.
- Click the Superannuation tab and then click New.
- For the Superannuation Name, we've chosen Building Award Super Flat $.
- Select the Contribution Type as Superannuation Guarantee (expense).
- Enter the Calculation Basis as $95.00 Dollars per Pay Period. In this example the employee is paid fortnightly and entitled to $95 minimum superannuation. The pay frequency for the employee is set up in the employee's card file.
- Set the Limit to No Limit.
- There is no Minimum Wage Threshold for this category so it should remain $0.00. See our example Superannuation Information window below.
- Click Employee and select the employees to receive this category.
- Click OK.
Task 2 - Create a superannuation category for superannuation where superannuation is greater than the flat rate
- Go to the Payroll command centre and click Payroll Categories.
- Click the Superannuation tab and then click New.
- For the Superannuation Name we've chosen Building Award Super or Greater.
- Select the Contribution Type as Superannuation Guarantee (expense).
- Enter the Calculation Basis as 9.50% Percent of Gross Wages.
- Enter the Exclusions. Exclude the first $1000.00 of eligible wages from calculations. For information on calculating the exclusion amount, see 'Calculating the exclusion' below. In summary, the following formula is used:
Minimum Superannuation required by the award=$XX.XX, then $XX.XX divided by 0.095=$ Exclusion value - Set the Limit to No Limit.
- There is no Minimum Wage Threshold for this category so it should remain $0.00. See our example below.
-
Click Employee and select the employees to receive this category.
-
Click Exempt and select all wage categories that are not required to accrue superannuation. This will be as specified by the award.
-
Click OK.
Calculating the exclusion
You can calculate the exclusion amount by using this formula:
Minimum Superannuation required by the award=$XX.XX
$XX.XX divided by 0.095=$ Exclusion value
Applying this formula to this example:
Minimum Superannuation required by the award=$95.00
$95.00 divided by 0.095=$1000.00
This is the gross wages that are to be excluded each pay.
9.50% of $1000.00 is $95.00. You have already paid $95.00 superannuation as the flat rate. You do not have to pay it again so you exclude it from further required superannuation calculations. You will insert $1000.00 as the excluded wage amount because superannuation will have already been calculated as part of the flat rate category.
Task 3 - Record the pay
When you pay the employee, the correct amount of superannuation stipulated by the award will be calculated automatically:
- If 9.5% of the gross wages is less than $95.00, then $95.00 of superannuation will be added to the employee's pay. This is shown in Example 1.
- If 9.5% of the gross wages is greater than $95.00, then 9.5% of the gross wage will be calculated as superannuation. This is shown in Example 2.
Example 1
Pay where 9.5% of gross wages is less than the minimum for the award and the minimum is still added to the pay.
As you can see, the employee has earned $975 gross wages on this pay. This would normally equal $92.62 superannuation. As a result of the award, they are being given a flat rate of $95.00.
Example 2
Pay where 9.5% of gross wages is more than the award minimum. 9.5% of the gross wages is added to the pay as superannuation.
You can see that gross wages are $1200. The Building Award Super Flat $ is always being used to generate superannuation on each pay, in this example $95.00. When the gross wages being paid exceed the flat rate of superannuation (equivalent to 9.5%), the Building Award Super or Greater category is being activated and it is generating the additional super calculation that is required. In this example, an additional $19.00 is calculated.
The software has calculated the required values for superannuation.
9.5% of $1200=$114.00.
This is the required amount of superannuation on the pay.
$95.00 + $19.00=$114.00.
This is the calculated amount of superannuation on the pay.
