Salary sacrifice into super - GL treatment

Hi Michael_H 

The journal entry below recorded in MYOB is correct.    The Salary Sacrifice is not an expense to your business.  The Gross Wagess is the expense.

1-1220 Electronic Clearing Account  0 (CR)

6-1400 Wages Expenses                    $X (DR)

2-1420 Superannuation payable       $X (CR)

Your suggested journal below  is incorrect and the GROSS wages must be recorded and reported to the ATO otherwise their payment summaries will be incorrect. 

Hi CloudMindAcc ,

Thank you for your input.

ATO specifically prescribes that salary sacrifice into super is not to be included into Gross payments, and requests to report it under 'Reportable Employer Super contributions' , see -

https://www.ato.gov.au/Forms/PAYG-payment-summary---individual-non-business/?page=2

That's why I would prefer to treat it as a Superannuation expense, rather than Salary expense.

Hi Michael_H 

Salary Sacrifice is reported under the STP ATO reporting category as Reportable Employer Super Contributions.

Refer below:

Hi CloudMindAcc ,

I assume it does report correctly, and it means that GL expense of wages in MYOB is not equal to Gross Wages reported to ATO - and this is where I can see the reconciliation problem. Do you know if there any way to run a report on Salary sacrifice transactions and amounts?

Thanks again for your help.

Hi CloudMindAcc 

Thanks, this report is a workaround as the amounts could be manually adjusted in GL thus reconciled with the reported amount. [I wish MYOB would have a bit more flexibility as many other systems.]

Hi Michael_H glad I could help you.   Another option (if you don't already do this) is I reconcile the Superannuation Payable Liability G/L account quarterly or monthly back to zero in the bank reconcilation screen.  This will highlight if a user has posted a transaction directly to the G/L account and any discrepancies.   

You are absolutely correct, Salary sacrificed super from Gross Wages is a deduction to the company as Superannuation Expense NOT Gross Wages & is reported as RESC in the PAYG Summary as such.  MYOB does this incorrectly and should simply allow for the the Salary Sacrifice "type" to allow those amounts to be processed to Super Payable & Super Expenses but reduces the overall PAYG deducted from the reduced Gross Wages for the employee, otherwise you will overstate their Gross Wages for the year, unless you are particular to exclude the Salary Sacrifice Super category from the total Gross Wages when preparing the PAYG Summaries.  Every Payroll report should reconcile and reflect the RESC amounts, but just makes it complicated with this process.