STP Salary Sacrifice - Set-up and what's included in STP info to the ATO - per payroll and annually

[Kym__Yeoward]

In answer to a private query from @Mike_James :

STP Payroll set-up:

For Salary Sacrifice Deduction (Non-Super):

The ATO Reporting Category for this is: Not Reportable

In order to ensure the Deduction is Pre-Tax in Payroll and the STP engine, we need to also exempt the Deduction from Tax as well. Click the Exempt button and then tick PAYG Witholding:

For Salary Sacrifice Superannuation:

When setting up the Salary Sacrifice Category, we will need to make sure we are specifying the ATO Reporting Category and Contribution Type accordingly:

• ATO Reporting Category: Reportable Employer Super Contributions
• Contribution Type: Salary Sacrifice (Deduction)

Like so: 

 Here is a support note that goes through the processes: Set up salary sacrifice superannuation

STP Reporting to ATO:

- Per Payroll

– Gross salaries, wages, allowances, directors fees, CDEP, termination pays and ETPs
- Superannuation: SGC and Additional Employer (as RESC) (Sal sac super is Not Reportable - see below))

- Deductions : Only Union/Prof Assoc Fees, Workplace Giving and ETP Tax Withholding

(All other deductions are Non-Reportable)

- Annual RFB Reporting:

Reportable Fringe Benefits (RFBs) will be reported annually, via an Adjustment Event, before the end of the payroll year (e.g. 2018-19). This will include the manually calculated grossed-up value of salary sacrifice, over the recent FBT year. Annual reporting will be similar to the current situation for annual payment summaries. That is there will be separate columns for sal. sac. earnings under a s.57AA status (PBIs, hospitals and health-promotion charities) and non-s.57AA (all other orgs.)  More details to come soon, from the ATO and MYOB.

Extract from MYOB Support Note "How do I assign salary sacrifice superannuation ?":

When reporting payroll amounts using Single Touch Payroll, gross wage amounts are reduced automatically by deduction amounts that are marked as a before-tax deductions. This includes salary sacrifice superannuation deductions. It doesn’t matter which ATO category a deduction is assigned to (including the Not reportable category).

Previously, to reduce taxable gross amount on payment summaries, you needed to assign the relevant payroll category (for example, salary sacrifice) to gross payments. You don't need to do this for single touch payroll reporting.

Kym Yeoward CPA & CC

Darwin (Palmerston)

[Kym__Yeoward · Accepted solution]

An update to STP Reporting to ATO per Payroll

- Productivity Superannuation is Not Reportable.

Reason: The ATO does not require reporting of superannuation contributions, where they are:

- superannuation guarantee contributions (SGC) or 

-contributions required under an industrial award, collective agreement, super fund rules, or

- extra contributions that an employee could not influence (including "productivity superannuation"), or

- contributions from the employee's after-tax income (that is, from pay deductions)

See this guidance note: ATO - Working-out if [superannuation] contributions are reportable

Kym Yeoward CPA & CC

Darwin (Palmerston)

[Bill999]

Hi I posted this separately but got no response.

We are a NFP with FBT exemption - we have our payroll set up with salary sacrifice deductions (not super) as a deduction category with ATO code not reportable and exempt box ticked to deduct before tax is calculated.

These are set up as per instructions from MYOB.

I have just processed our first payroll of the new year.

I check the ATO portal to confirm single touch payroll worked.

It did but the gross amount showing against the remit in the ATO portal INCLUDES the salary sacrifice amounts.

MYOB advised these deductions would not be included in the Gross figure - is there an issue here?

Regards  Bill Kyle

[Sooky]

There is an issue with this solution in that it is not deducting the Salary Sarifice from the Gross in the Gross Wages Section, which will lead to the Gross amount looking like the employee has not paid the correct tax.  As I understand we will no longer be issuing PAYG Summaries so will not be able to assign the salary sacrifice payroll categories against Gross payments to reduce the taxable income... this is going to lead to problems come July 2019..

The Salary Sacrifice non Super deductions need to come off the Gross Payments.  if we select Not reportable they wont even show up.

[Em_P]

Hi @Sooky

When you select Not Reportable for Salary Sacrifice deductions this is simply in the User Interface.

They will be taken off of the Gross Wages automatically in the background.

There is a display issue with how they are showing in the Business Portal, but they are definitely working as intended.