STP 2 All purpose allowances

[tns05]

Thank you Steven for your response.

I have spent many hours trying to find a work around for this issue but have come to the conclusion I am going to have to set up approx 50 new payroll categories and my payroll entitlement reports are going to be rendered useless in terms of dollar values - which is not good considering I pay a large monthly fee for something that should just work at the click of a button & give the info I require in a second...

Anyway, my question for you.  Currently all my employees are set up for being paid hourly rates.  After many hours of trying to find the right calculations for all my new payroll categories, if I continue on an hourly rate system, my staff are all going to to underpaid as the calculations are just not stacking up (they do but at 5 decimal places which will look even more ridiculous on payslips).  The only way I can make this work is to change my entire payroll to salary based and set up all new overtime categories for fixed rates (based on their current hourly rates).  As we are in the middle of a financial year, can I change my entire payroll from hourly wage to salary wage without having to set up new employee cards?  By making this change, will it affect any of my FY23 payroll reporting?

I would appreciate your feed back asap on this as I have 3 weeks left to make a change as we close down for christmas and won't be back until January, which is when all of this new STP2 is supposed to be set up by.

Kind regards

[Eliane]

@WayneC  @Steven_M 

I agree Wayne! It seems to me that MYOB doesn't want to take responsibility for their customers' failure to report this allowance separately, knowing fully well that this failure falls on them!

How will Accountants help you report this on payslips, if the foundation is incompatible?!

Steven, this is not an accounting issue, but rather a software's, be mindful of this!

At least give us a temporary fix to work around this until the software is fully compliant.

[Jen_M]

Hi @tns05 ,

Don't know if this will be of help for your situation...  We have decided we need to set up new categories for overtime rates and loadings for each employee or pay rate.  The new categories are still Hourly (rather than Salary), but we select the "fixed hourly rate of" rather than using the multiplier and work out what the $ per unit should be from their rate including all purpose allowances.  Eg current hourly rate of $40 with allowances (with allowances stripped out new base hourly of say $38), overtime at 1.5x is fixed hourly rate of $60/hr.

It does feel messy having so many more categories and does of course mean that whenever there is an increase in the allowances or a pay rise given, we will need to adjust all the overtime and loading categories.

If someone else has a better suggestion, would be very happy to hear it!

Regards,

Jenny

[Eliane]

@Jen_M  This is very complexing! All our employees are at different hourly rates (not salary). Many businesses will run a very high risk of payroll mistakes... I would love to know if other softwares are having this same issue... 

[tns05]

Hi @Jen_M 

I have been working through a few different scenarios on how to make it work.  All my employees are currently on hourly rates, most full time and a couple on casual but at all different rates of pay however as far as overtime is concerned, I have worked out that I need to set up categories as you have suggested.

Knowing I am going to have to set up a huge amount of payroll categories, I am trying to figure which scenario is going to cause the least amount of pain.

My first idea was to break down each allowance I have to pay into an hourly rate however the only way this works is I have to enter numbers that are 5+decimal points long, including the new hourly rate that the employee would move to (current rate less the hourly rate of each allowance).  If the MYOB system rounds these figures to a 2 decimal place figure, then my staff would be underpaid (roughly 11 cents), so this scenario doesn't work.  I have also looked at just entering weekly amount allowance categories however this still doesn't work as the hourly rate + allowances still won't add up to the current rates of pay.  The only way I could make this scenario work was decrease the hourly rate somewhat lower and round the allowances up to the nearest whole cent.  Eg Tool allowance - round from .549736842 to .55 cents per hour.

My second idea is to somehow change all my full time employees to a salary amount (less the amount of allowances), then set up the allowances as a single weekly figure to be added each pay run and that will give the correct weekly rate of pay.  Then for overtime, I will need to set up categories at a fixed rate overtime amounts for each current base hourly rates we pay.  In my head this is the easiest way, still a huge amount of categories requiring setting up however, I haven't looked to see if this scenario will work with MYOB as I think the salary amount to be entered into MYOB has to be an annual amount and not a weekly amount.

There is no simple solution for this at all.

[tns05]

@Eliane  Xero have given their customers an extension to end of March 2023 to be compliant while they work on a solution however, I am unfamilar with their payroll system.

[Jen_M]

Hi @tns05 ,

We are setting up the allowance as an hourly rate rounded up to whole cent amounts (2 decimal places) and reducing the base hourly by this amount.  This is mainly because we have an all purpose allowance that applies to all workers (not just those with certain qualifications) and the award indicates a rounded up figure for hourly basis (even though this ends up being slightly higher than the weekly allowance amount).  Does your award break down the all purpose allowances in a similar way?  We referred in part to the summary of hourly rates of pay in the schedules at the end of the award document.

And yes, I think salary amounts have to be entered as the yearly figure and MYOB calculates an hourly rate within the system from that.

You're right, there is no simple solution.  Like you, we are just trying to find the least painful way to deal with it.

Regards,

Jenny

[tns05]

Hi @Jen_M 

I have 3 allowances needing to be taken out of the hourly rate, 1 being an industry allowance.  The 3 allowances I need to take out have been provided under the award as a weekly rate so I have been working on breaking these down to an hourly rate however, it comes to a mass amount of numbers.  Given we have trades, apprentices and labourers, the amounts of the allowances are at different rates.  The only rate that is the same across the board is the tool allowance.

I have checked and we with our award, I too can round these allowances up to a 2 decimal place and then have a lower hourly rate.  By doing this method, I tested it against 2 of the hourly pay rates we have and it was the only one that worked out correctly against both different pay rates - working on an hourly rate of pay.

Thank you for your suggestions!

[Jen_M]

Hi @tns05 ,

As long as your base hourly once the allowances are stripped out is still at least the award minimum for the relevant classifications I would hope that would be ok (ie the rounded up allowance amounts have already been taken into account in your current hourly rates).

Your situation is much more complicated than ours.  Best of luck working something out.

There will be many more things to make sure we include and check each week now.  Hopefully none of us makes a mistake...

Regards,

Jenny

[ChrissyK1]

Hi kdp05,

I was able to use percenatges for some of the all purpose allowances which then mmade it possible to use for everyone under that award. see notes below & hope that helps anyone else

MYOB – STP 2 Payroll adjustments – re; Base Rate/Allowance & O/Time calculation issues

1. Adjust the Hourly Base rate to exclude the “All Purpose Allowances” for MA00025.

1. Set up new payroll categories for these allowances – Industry @ 3.70% & Licence @ 3.60%.  Make these new allowances hourly based and use the relevant percentage for each allowance to calculate the hourly amount. Use the Wage name “Allowance Industry” etc. Then allocate this wage category to the relevant employees and add the relevant hours (38) to their standard pay. The allowances will then come up automatically with the standard pay for that employee. (if using the hourly rate make sure Allowances are exempt from the percentage based entitlement/leave accruals as they will affect that calculation).

1. Set up new payroll category for the allowance – Tools.  Make the tool allowance hourly based and use the relevant Wage name “Allowance Tools”etc. Then allocate this wage category to the relevant employees and add the relevant hours (38) to their standard pay. The allowance will then come up automatically with the standard pay for that employee.

1. These allowances should each be processed weekly in the payroll regardless of holidays, personal leave etc.

1. NB: The Value of the allowances are not included in the calculations for leave entitlements as they are now removed from the base rate. A manual adjustment will be required to accurately calculate the Allowance components of the liabilities for leave entitlement etc.

1. The allowances will be used automatically to calculate the correct SCG Superannuation.

1. The 17.5% leave loading will need to be adjusted to include the Allowances as they are no longer included in the base rate.

1. Overtime rates are calculated on the combined value of base rate and the all-purpose allowances. MYOB does not have the ability to calculate these rates separately. Prior to STP2 these were combined into one base rate to allow the calculations of overtime, accrued entitlements etc. The pay memo would list the inclusion of the allowances.

1. Setup overtime rates as a fixed hourly amount as per the award for each employee required. EG: “Overtime 24.74 (@1.5NW)” & Overtime 32.98 (@2 NW). Add these to the relevant employees and make sure to exempt these new overtime wage categories from SCG superannuation and the accrued entitlements.