Payroll pitfalls to watch for in salary sacrifice superannuation


Salary Sacrifice Superannuation via Payroll in Accounting Software Xero, MYOB, Reckon – The pitfalls to watch out for.

  1. Reportable Superannuation on Payment Summaries – Make sure if the employee is influencing the salary sacrifice superannuation that this show as RESC on the payment summary and NOT in Gross Wages on the payment summary. Eg Joan is on a salary of $100,000 excluding super and voluntarily Salary Sacrifices $20,000. Show $20,000 in RESC and $80,000 in gross wages.
  2. W1 – Gross Wages on BAS. DO NOT include amounts subject to salary sacrifice arrangements! So Joan would show $80,000 at W1 over the year, not $100,000. Many common software packages will by default not exclude the salary sacrifice at W1 unless you specifically set the software up correctly. For further information please visit the ATO website here.
  3. You may only have to pay the superannuation guarantee on the gross cash component, so for Joan you would only have to pay super on $80,000, not $100,000. (Check the employees award or agreement as this may be covered in there that you have to the super guarantee on the original salary). So really important that you have documentation in place with your employee clearly stating if the employer will still pay the super guarantee on the employees orginal salary BEFORE packaging. Again most software packages will pay the super guarantee on the employee’s original salary so check your agreement or award, then test your software.
  4. Wages Expense Account – If you setup a Salary Sacrificing arrangement make sure you are still including this amount in your profit and loss in the correct area on your profit and loss or you may end up underestimating your gross wages. This can then miscalculate your obligations for Workcover and Payroll Tax as most states and territories include Salary Sacrifice when working out gross wages.

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