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Nooora's avatar
Nooora
User
3 years ago
Solved

Payroll - Superannuation & Tax for KM Travel Claims

Hello.

Would need your guidance and help on how to fix on KM Travel Claims in Payroll that has already been setup but giving us different results/scenarios when processing payroll every fortnight.

 

We've taken over from previous finance team and currently these are our issues that we need help with to correct them. We tried to figure it out but unable to.

 

Issue 1: KM travel claim taxed when it is more than 905km. KM travel claim not taxed if it is below 905km.

 

Issue 2: Superannuation being paid based on KM travel claim. (mixed scenarios)

For example 

Wage for hours worked $500 and $50 for KM travel claims.

Current scenario A: 10% superannuation calculated as 10% * ($500+$50).

 

Wage for hours worked $0 and $50 for KM travel claims.

Current scenario B: 10% superannuation calculated as 10% * $50 (with no worked hours)

 

Issue 3: Superannuation being paid eventhough gross wage does not meet the $450 threshold (mixed scenarios)

For example 

Wage for hours worked $200 and $50 for KM travel claims. 

Current scenario A: 10% superannuation calculated as 10% * ($200+$50).

 

Wage for hours worked $0 and $50 for KM travel claims. 

Current scenario B: 10% superannuation calculated as 10% * $50 (with no worked hours)

 

Wage for hours worked $200 and $0 for KM travel claims. 

Current scenario C: 10% superannuation calculated as 10% * $200

 

Wage for hours worked $200 and $0 for KM travel claims. 

Current scenario D: 10% superannuation calculated as 10% * $0

 

Issue 4: KM travel claim included in gross wage

 

 

We tried to fix and did a number of test on payroll but it seems that it wasn't solved.

Areas that we need fixing are as above and it should show as follows for every staff payroll:

 

1: 100% KM travel claim are to be taxed

 

2: For superannuation calculation, KM travel claims are to be excluded from the $450 threshold. 

For example 

Wage for hours worked $500 and $50 for KM travel claims.

Correct scenario A: 10% superannuation calculated as 10% * $500.

 

Wage for hours worked $400 and $50 for KM travel claims.

Correct scenario B: 10% superannuation calculated as 10% * $0.00

 

Wage for hours worked $0 and $50 for KM travel claims.

Correct scenario C: 10% superannuation calculated as 10% * $0.00

 

Would need your help on these please.

Thank you.

  • Tracey_H's avatar
    Tracey_H
    3 years ago

    Hi Nooora 

     

    Thanks for your post. If you haven't already done so I'd check with the ATO on whether super is payable on the KM travel allowance or not. This link to the ATO website says that Cents per KM car expense allowance and Travel allowances aren't OTEs so not included in super calculations. If that is your situation you'd need to exclude the allowance from super calculations by:

     

    1. go to Payroll Categories>>Superannuation tab
    2. open the Superannuation Guarantee category
    3. click Exempt, tick the allowance that shouldn't be included in the calculation and click ok
    4. click Ok to save the changes

    Super is 10% of Ordinary Time Earnings (OTEs) and if your travel allowance is seen to be an OTE I would expect that it is included in the $450 threshold, something else I'd check with the ATO.

     

    If super is calculating when the $450 threshold hasn't been meet, make sure the threshold is entered in the Superannuation Guarantee payroll category.

     

    If the travel allowance is included in gross wages in the AccountRight reports that's correct. In the STP reports it should be reported under allowances. It it's not make sure the correct ATO reporting category has been assigned to the payroll category.

     

    This help article, Allowances, has full instructions on setting up the KM travel allowance. If 100% of the allowance needs to be taxed make sure you don't exempt it from PAYG calculations. Do this is the allowance payroll category>>click on Exempt and make sure PAYG Withholding isn't ticked. It sounds like you have two payroll categories, one that is exempt from PAYG calculations and one that isn't. If you are taxing the whole amount, only use the taxed payroll category when processing pays.

     

    Please let me know if you need further help with this.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

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  • Tracey_H's avatar
    Tracey_H
    Former Staff
    3 years ago

    Hi Nooora 

     

    Thanks for your post. If you haven't already done so I'd check with the ATO on whether super is payable on the KM travel allowance or not. This link to the ATO website says that Cents per KM car expense allowance and Travel allowances aren't OTEs so not included in super calculations. If that is your situation you'd need to exclude the allowance from super calculations by:

     

    1. go to Payroll Categories>>Superannuation tab
    2. open the Superannuation Guarantee category
    3. click Exempt, tick the allowance that shouldn't be included in the calculation and click ok
    4. click Ok to save the changes

    Super is 10% of Ordinary Time Earnings (OTEs) and if your travel allowance is seen to be an OTE I would expect that it is included in the $450 threshold, something else I'd check with the ATO.

     

    If super is calculating when the $450 threshold hasn't been meet, make sure the threshold is entered in the Superannuation Guarantee payroll category.

     

    If the travel allowance is included in gross wages in the AccountRight reports that's correct. In the STP reports it should be reported under allowances. It it's not make sure the correct ATO reporting category has been assigned to the payroll category.

     

    This help article, Allowances, has full instructions on setting up the KM travel allowance. If 100% of the allowance needs to be taxed make sure you don't exempt it from PAYG calculations. Do this is the allowance payroll category>>click on Exempt and make sure PAYG Withholding isn't ticked. It sounds like you have two payroll categories, one that is exempt from PAYG calculations and one that isn't. If you are taxing the whole amount, only use the taxed payroll category when processing pays.

     

    Please let me know if you need further help with this.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.