Paying Super for Contractors

I was informed by the ICB support that it should not go through STP.  Maybe they were mistaken.

Hi Was interested in the process.  Do a nil pay with just the super ?  However, the client has received advice and he is going to pay the super directly into each subbies super fund when he pays their invoice.  Lots of work for him but I do not have to track it.  However, if it needs to go through STP that is another matter.  Would like to know the right answer to that one

Hi Roslyn_Little

We do not process through MYOB Payroll at all.  Our attempts to process through payroll resulted in an error when updating to ATO STP reporting.  The ATO website states that super contributions to contractors are to be reported Via STP2 if the accounting software can support it .  As MYOB does not currently have the functionality to treat this corrrectly it is clear that the MYOB accounting software does not support it.

We have adopted the following process in regards to paying super for contractors.

1. Enter Subcontractor Invoice as usual into MYOB as a purchase and code to G/L Account subcontractors
2. Update a running spreadsheet for all invoice amounts for the subcontractors applicable to super
3. At the end of each month subtotal the amount of subcontractor payments subject to Super
4. Create a purchase or spend money in MYOB payable to the superannuation company and allocate to a separate expense a/c in G/L Superannuation - Contractors
5. We use a clearing house for our super payments which has a portal.  We have set up the subcontractors in the portal and update the super payable for at the end of each month
6. Process payment to super clearing house for the monthly super owed to the subcontractors.

Hope that helps.

Hi Lmcstack​,

The method you have stated is very similar to a method i have used for over 7 years now.

Pay the contractor via spend money expensed to contractors, chq number for each subbie is their first name or surname.

At the end of the month I run the accounts transaction report filtered to the contractor expense and display.  I will then hide fields not needed i.e. Src, job no.  I then export to excel.  Sort the data by the ID no column containing their name.  Insert a line at end of subbie payments, add the auto sum formula, in the cell next to that I enter the formula cell x 0.12.

Once done for first subbie i will copy that line and then insert that line after each subbie.  At the bottom of them all i have all the super amounts adding to give a total and also have a cell working the total of payments made for the month times the super rate, for my crosscheck.  Both should agree.

If the subbies charge for something other than labour, it should not be expensed to the subcontractors expense so should not come into the equation.

I note you mentioned the invoice amounts.  If using that and if the subbie is registered for GST i assume the amount of gst has been taken out of the equation.

copy of my spreadsheet attached.

Hi Julie

We only have the one subcontractor that falls into this category and they are not registered for GST.  But I agree, if they were registered for GST the calculation for super would be on the net amount ie. GST ex.  If you check with ATO you will see that they also confirm this.

"super is not calculated on the GST invoiced amount. You calculate super on the labour component of the contract.

Check out the info under the Ordinary hours heading."

Cheers

Lynne