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gailmorgan's avatar
gailmorgan
Experienced Cover User
3 years ago
Solved

One off large lump sum Salary Sacrifice 25k (wages have already been paid)

He has already been paid wages (99K) with salary sacrifice not taken off. So how do I now enter his one off 25k sacrifice?? His annual gross is 99k. I have read other posts, but they don't quite see...
  • LRBooks61's avatar
    LRBooks61
    3 years ago

    Just a couple of things to note

     

    1.The cap that applies to concessional super contributions this financial year is $27500

    Note that SGC and sal sac contributions make up this type of contributions and as your employee is awaiting advice from his accountant on the amount to sacrifice given the 10% SGC would be $9900 then he would not be able to contribute more than $17600

     

    2. The salary sacrifice contribution once recorded in MYOB needs to be lodged and paid to the super fund before 30 June 2022 to allow the deduction in this financial year. I mention this because , if you pay super quarterly the next contribution payment would be made in July 2022 and therefore miss the recording of the contribution for this financial year

     

    As far as the processing of the salary sacrifice , you are going to process the salary sacrifice in a stand alone payrun. Assure that no leave is accrued or other super recorded also.

     

    The reason for this is to just record the salary sacrifice and the PAYG saving so that the liability for the super is both recorded to the ATO and also in MYOB so that you can track and pay it. It also amends the PAYG YTD figure reported to the ATO . ( amending the payment summary for the employee)

     

    To determine those amounts it is necessary to calculate the change in PAYG due to the salary sacrifice contribution.

     

    I will attach a file with screen shots to show you how I have done this.

     

    You need to have created a salaray sacrifice payroll category and linked your employee to it first.

     

    So the givens are that you pay monthly therefore 12 pays

     

    I have used the gross monthly pay of 8250 and the PAYG figure of 2413 that you provided. Net $5837

     

    Salary Sacrifice - I will use the $17600 contribution as an example but you can substitute any amount you wish.

    All you need to do is to calculate a monthly figure for that amount

    eg 17600 / 12 =1466.66

     

    So you would go into process pays and select to pay an individual and select the employee you want

     

    This will bring up the usual pay

     

    You will then input the monthly salary sacrifice amount ( in this instance   -$1466.66 ) and note the results to the change in PAYG 

     

    In my example the PAYG has gone from $2413 to $ 1910 a saving of $503 a month.

     

    The stand alone transaction is based on the whole 12 months ( this means that there are no adjustments to be made to following pay runs and they can be recorded as usual.

     

    Therefore the stand alone transaction is :

     

    Salary Sac -$ 17600

    PAYG $6036

     

    Amount to take back from employee loan  $11564

     

    When the pay is processed it is a negative amount . It asks for a spend money , just ignore that for the time being.

     

    Once you have completed the payrun and the reporting to the ATO you can then do the transaction to recoup the money for the loan

     

    MYOB has produced a transaction to the linked account for cash payments ( I imagine it to be the usual bank account)

     

    So you will need to do a journal putting that transaction to the employee loan account

     

    DR Bank Account   $ 11 564 Tax code  N-T

    CR Employee loan account $ 11564 Tax code N-T

     

    Hope this is clear enough and helps

     

    Lisa

LRBooks61's avatar
LRBooks61
Ultimate Cover User
3 years ago

hi

This is tricky.

 

So is this an employee or the owner of the business? I ask this as if you have paid him his entire salary have you received the money for the salary sacrifice? 

 As it is only April do you still have payrolls to offset the payment of sal sac?

Is this  for this financial year?

 

Anyway 

First you need to set up a salary sacrifice super payroll category and link the employee to it.

 

I would do a payrun just for this employee ( so that you can determine the PAYG etc that would be normally paid)

 

For example if you pay fortnightly

 

 

You will need to take note of the super sacrifice and PAYG figures , then cancel out.

 

In my example I have calculated an amount over 26 pay periods, If you are going to do a lump sum as at today you need to calculate the $25k divided by periods paid to date

 

For instance this year say there are 4pays left for this year and you want to pay a lump sum as at today and you pay fortnightly it is to be divided over 22 pays ( 25k/ 22=1136.36) do the calculation on that 

 

So your base salary figure is the same but your PAYG will be less now 

eg usual PAYG a fortnight is $948 my example says $ 618 so the savings in PAYG is $ 330 for 22 pay runs

You will need to do a correcting pay run just for this employee 

 

 

You can process this and recordthis transaction to send to ATO , in my test it changes to the cash account ( which is tricky)

 

Effectively you are increasing the employees Super payment ( make sure it is recorded to the fund as salary sacrifice and reducing the PAYG they are paying ( and your liability also ) 

 

So this produces a payment , which is where it gets tricky . When it comes up to spend money IGNORE and just proceed through the screens

 

No payment is recorded but the liabilities are in myob and will be paid with the payroll liabilities

 

Hope that helps

 

Lisa

 

Lisa

  • gailmorgan's avatar
    gailmorgan
    Experienced Cover User
    3 years ago

    Ok  bit confusing. He is managing director and has 3 monthly pays yet to process for this financial year:                  8,250 x 3 = 24,750 gross. (he may not sal sac total of 25k, it could be less until he confirms. His normal annual pay is 99k /12 mths = 8,250 a month with 2,413 tax.

     

    Can you explain it with the above wages yet to be paid?

     

    Sorry this is really doing my head in lol.

     

     

    • LRBooks61's avatar
      LRBooks61
      Ultimate Cover User
      3 years ago

      Actually , you are not mad at all

       

      If the employee wants to salary sacrifice he will need to decide how much of his next 3 monthly pays he wishes to sacrifice 

       

      Otherwise he needs to repay you the $17K that was the calculation I made at the start ( 25k - 7+k PAYG)

       

      so really it is up to him - that is why I asked about them being an owner as you could put it against owners contributions.

       

      Once you figure out what you need to do I will do some calcs

       

      BTW - 

      When I calculate his pay the tax is calculated as $2054 without super salary sacrifice.

      Is he paying additional tax ? HECS debt would make PAYG  $2630  ( so an additional 359 being paid)

       

      Lisa

      • gailmorgan's avatar
        gailmorgan
        Experienced Cover User
        3 years ago
        Sorry, correction 99k is total annual salary. He does the pay slips and always has been a monthly wage (for years) 8,250 - 2,413 tax +5,837.00 net. He has no HECS etc.
         
        I have yet to pay him April/May/June so 3 x $8,250.00 = 24,750.00.
         
         
        Also, he has a loan account that the company owes him a lot, as that is where I journal his wages to direct.
        If he ends up being overpaid for this entry, I can pull the amount of money needed from that loan account to balance it in the pay entry (if that sounds correct)
         
         
        (He is o/seas so I don't have the sal sac exact amount (he wants to check with his
         accountant first) 
         
         
        So, I just want to be able to work it out and do it when he tells me the final amount to sacrifice. 15-20-25k is the past amounts he sacrificed.
         
        Please explain what you mean by owners contributions.