EOY Support Note # 5 Payment Summary Guide

Transcription

1 EOY Support Note # 5 Payment Summary Guide The end of financial year deadline is fast approaching. This guide covers using MYOB to complete your PAYG payment summaries and other end of year payroll issues. Important Dates You must forward PAYG Payment Summaries to your employees by 14 July You must forward copies of Payment Summaries and supporting information to the Tax Office by the 14 August. (Lodge electronically for best efficiency) In order to receive a tax deduction in this year the Superannuation must be paid this year ie before 30 June. If it isn t paid 21 days after the end of the quarter then no tax deduction ever Using Accounting Software to Complete Your PAYG Payment Summaries Accounting Software Packages will not let you enter pays dated after 30 th June until you have prepared your Payment Summaries and rolled the payroll to the new payroll year. However, you may find you don t have time or enough information to prepare the payments summaries before the first payrun of the new payroll year. Workaround: 1. Create a folder 2014 Payroll 2. Copy the Accounting File to the folder 3. Additionally take a backup of your Accounting File on a USB device or hard drive and label payroll2014.zip 4. Close the file to the new payroll year and enter pays 5. When ready, use the file in 2014 folder or restore the backup and prepare the 2014 payment summaries. The Institute of Certified Bookkeepers Page 1

2 Step 1 Check employee details Ensure your Employee Cards have all the necessary information entered, including: First and Last Name Address (including the state in capital letters) Tax File Number Note: the following Tax File Numbers may be used in special circumstances: Payee is under 18 years of age and earns $350 or less a week Payee is a Commonwealth Government Pensioner Payee is applying for a TFN and 28 days has not passed If the taxpayer chooses not to quote a TFN and has not claimed an exemption from quoting a TFN or does not fit into any of the above categories (or similar) You have cards (inactive or active) for old employees with missing TFNs. Only use these dummy numbers if you are certain the payee did not receive any form of payment from you in the year just ended. Review employment dates The employment dates that appear on the payment summaries depend on the dates entered in the employee s payroll information screen. Ensure the employee s correct start date has been entered. If the employee has been terminated in the current payroll year you will also need to enter the termination date. Step 2 Reconcile gross wages A. Print your Profit and Loss Statement for the year ended 30 June 20XX & note the total wages for the year. (The relevant total may be in several accounts) B. Print the Payroll Register (Summary) for the period Year to date and note the total wages for the year from this report. Your total wages figure from the Profit and Loss Statement and Payroll Register (Summary) should agree. The Institute of Certified Bookkeepers Page 2

3 Why doesn't it agree? Check for any wrong postings by reviewing an account inquiry on your wages account. Look for any postings that have not been entered through 'Pay Employees'. Ensure that all amounts paid to the ATO in respect of PAYG withholding instalments have been coded to the PAYG Withholding Payable account and not to salaries. Make sure you take into account any allowances posted to accounts other than wages. Step 3 Reconcile PAYG Withholding Add up your total PAYG withholding payments for the year paid on your BAS. Refer back to the Payroll Register (Summary) printed in Step 2. Note the total amount of PAYG Withholding deducted per wages, should agree to the total PAYG withholding payments lodged on the Business Activity Statements (BAS). If a discrepancy, adjust PAYGW on the June BAS. THIS IS AN IMPORTANT RECONCILIATION Step 4 Review and Reconcile Entitlements A. Ensure the flag for Carry remaining entitlement over to next year for Holiday Entitlement is ticked. B. Print an Entitlement Detail Report from 1/7/XX to 30/6/XX to review & reconcile Holiday Pay Outstanding and to outline entitlements accrued and taken for the year. C. If Entitlement Balances are incorrect, run a payrun to adjust the balances and re-run report as at end of year. Step 5 Printing Reports Print the following reports and file them for the end of payroll year. Payroll Register Summary Payroll Activity Summary Payroll Summary Entitlement Balance (Detail) to show hours taken in the year Note these reports may look the same but they derive their information from different places. The Institute of Certified Bookkeepers Page 3

4 Step 6 Preparing PAYG Payment Summaries Ensure your Accounting Package is compatible with the latest ATO changes 2013 ATO will allow EMPDUPE files with EMPDUPE file versions of 11.0, , 10.0 and 9.0. Below is a table outlining software that can be used to prepare the payment summaries. Software Software Version EMPDUPE File version MYOB Australia AccountRight Plus 2013 AR AccountRight Plus 2011/2012 AR AccountRight Plus, Premier, Enterprise V19.5, V19.6, V19.7, V AccountRight Plus, Premier, Enterprise V MYOB Accounting Plus V MYOB Premier V MYOB Enterprise V Reckon Australia Reckon Plus, Pro, Premier & Ent 2013/ / Reckon Plus, Pro, Premier $ Ent 2012/ / Reckon Plus, Pro, Premier & Ent 2011/ / Reckon Plus, Pro, Premier & Ent 2010/ / Xero Xero with Integrated Payroll Automatic The Institute of Certified Bookkeepers Page 4

5 See below ATO Reference Tables for Allowances Table 1 - Allowances subject to PAYG withholding: Allowance type Allowances paid for working conditions, qualifications or special duties Are you required to Withhold from allowances? Is the allowance to be included on Payment Summary? If so, how is it to be shown? (include total allowance in gross payment) For example: crib, danger, dirt, height, site, shift or travelling time, trade, first aid certificate or safety officer. Allowances for non-deductible expenses For example: part-day travel (no overnight absence from employee's ordinary place of residence) meals (not award overtime meal allowance or overnight travel allowance) motor vehicle for non-deductible travel - for example, home to work, including cents per kilometre payments. Allowances for expected deductible expenses For example: Tools compulsory uniform, dry cleaning motor vehicle for work related travel, including cents per kilometre payments in excess of Australian Tax Office (ATO) rate (1) overseas accommodation for deductible travel. On-call allowance (include total allowance in gross payment) (show total allowance separately in the allowance box with an explanation) ordinary hours outside ordinary hours The Institute of Certified Bookkeepers Page 5

6 Table 2 - Allowances which are subject to a varied rate of withholding provided: Provided the employee is expected to incur expenses that may be able to be claimed as a tax deduction at least equal to the amount of the allowance, and the amount and nature of the allowance is shown separately in the accounting records of the employer. Refer to the footnotes for further information about certain allowances. Allowance type Cents per kilometre car expense payments using ATO rates (1) For payments made by applying the ATO rate to the number of kilometres travelled where the usage is up to 5,000 business kilometres. For payments made by applying the ATO rate to the number of kilometres travelled where the usage is in excess of 5,000 business kilometres. Award transport payments (2) For deductible transport expenses For non-deductible transport expenses Laundry (not dry cleaning) allowance for deductible clothing (3) Up to the threshold amount Over the threshold amount Award overtime meal allowances (4) Are you required to Withhold from allowances? No (from the payment for the excess over 5,000 kms) No (from total payment) No (from the excess over the threshold amount) No Is the allowance to be included on Payment Summary? If so, how is it to be shown? (show total allowance separately in allowance box with an explanation) (show total allowance separately in allowance box with an explanation) (show total allowance separately in allowance box with an explanation) (include total allowance in gross payment) (show total allowance separately in allowance box with an explanation) (show total allowance separately in allowance box with an explanation) No Up to reasonable allowances amount The Institute of Certified Bookkeepers Page 6

7 Over reasonable allowances amount The allowance must be paid under an industrial instrument in connection with overtime worked Domestic or overseas travel allowance involving an overnight absence from employee's ordinary place of residence (4) Up to reasonable allowances amount Over reasonable allowances amount An allowance for overseas accommodation must be subject to PAYG Withholding and be shown in the allowance box on the Payment Summary (from the excess over reasonable allowances amount) No (from the excess over reasonable allowances amount) (show total allowance separately in allowance box with an explanation) No (show total allowance separately in allowance box with an explanation) 1. The approved rate is a rate which is less than or equal to the ATO rate plus 1.5 cents and varies depending on the engine capacity of the vehicle. 2. An award transport payment is a transport payment covering particular travel that was paid under an industrial instrument (that is, an award, order, determination or industrial agreement) that was in force under Australian law on 29 October The current threshold amount for laundry expenses is $150. Dry cleaning allowances should have an amount withheld in accordance with Table Each year we publish a determination setting out the reasonable amounts for: o overtime meal allowance expenses o domestic travel allowance expenses o travel allowance expenses for employee truck drivers o overseas travel allowance expenses. Lump Sum Payment A-E: Possibly unused long service leave, redundancy payments and back pay (See below table for Lump Sum Allocations on the Payment Summaries or ETP The Institute of Certified Bookkeepers Page 7

8 TYPE: PAYG Tax Calculation Payment Summary Resignations, Allocation Retirement and Dismissals Unused Annual Leave + Leave Loading Accrued up to 17/8/93 Accrued from 18/8/93 All tax at 31.5% All taxed at marginal rates (Leave loading >$320) Lump Sum Payment A Gross Payment Unused Long Service Leave Accrued up to 15/8/78 Accrued from 16/8/78 to 17/8/93 Accrued from 18/8/93 Genuine Redundancy and Early Retirement Scheme From 1/7/2012 Up to limit of $8,806 + $4,404 per completed year of services (if the payment is over the tax free amount, the excess is an ETP) Employment Termination Payments (ETP) Pre 1/7/83 Component Post 1/7/83 Component Employee > 55+ years Employee < 55 years TYPE: Genuine Redundancy, Early Retirement Scheme and Invalidity Unused Annual Leave + Leave Loading All Payments Unused Long Service Leave Accrued up to 15/8/78 Accrued from 16/8/78 Genuine Redundancy and Early Retirement Scheme From 1/7/2012 Up to limit of $8,806 + $4,404 per completed year of services (if the payment is over the tax free amount, the excess is an ETP) 5% assessable taxed at marginal rates All Tax at 31.5% All taxed at marginal rates Tax Free Tax Free ETP Cap: 16.5% up to $ then 46.5% 31.5% up to $ then 46.5% PAYG Tax Calculation All tax at 31.5% 5% assessable taxed at marginal rates All Tax at 31.5% Tax Free Lump Sum Payment B Lump Sum Payment A Gross Payment Lump Sum Payment D ETP Payment Summary Payment Summary Allocation Lump Sum Payment A Lump Sum Payment B Lump Sum Payment A Lump Sum Payment D The Institute of Certified Bookkeepers Page 8

9 Employment Termination Payments (ETP) Tax Free Invalidity Component Tax Free Pre 1/7/83 Component ETP Payment ETP Cap: Summary Post 1/7/83 Component 16.5% up to $ then 46.5% Employee > 55+ years 31.5% up to $ then 46.5% Employee < 55 years Work Place Giving 1-3 Deductions 1-6 CDEP Salary or Wages: Exempt Foreign Income: Total Tax Withheld: ETP Taxable Component: Amounts Employee regularly donates to charities Eg: Union fees Used if the employee is in a Community Development Employment Project wages grant Exempt income and/or foreign source salary and wage income. (Not to be included in Gross Payments) PAYG Withholding If you are preparing an ETP Summary for an employee, you may need to enter additional information such as Termination Date and type of payment. An employment termination payment (ETP) is a lump sum payment made to an employee on termination. Examples of ETP s are: Genuine Redundancy Payments in excess of the tax free amount Unused Rostered Days off Payments in Lieu of Notice Ex-Gratia or Golden Handshakes Unused Personal Leave Compensation for loss of job or wrongful dismissal From 1/7/12 Employment Termination Payments (ETP) now have new codes. The codes are split between either Life or Death Benefit (see Employment below) Termination Payment Additional Information Benefit Type: None / Life / Death The Institute of Certified Bookkeepers Page 9

10 Life Benefit ETP Codes Code Description R ETP Made because of one of the following - Early retirement scheme - Genuine redundancy - Invalidity - Compensation by Personal injury Unfair dismissal Harassment discrimination O Other ETP not described by R, for example, golden handshake, gratuity, payment in lieu of notice, payment for unused sick leave, payment for unused rostered days off Multiple Payments for same Termination S You made a Code R payment to your employee in a previous income year for the same termination P You made a Code O Payment to your employee in a previous income year for the same termination Death Benefit ETP Codes Code Description D Death Benefit ETP paid to a dependant of the deceased B Death Benefit ETP paid to a non-dependant of the deceased and you made a termination payment to the non-dependant in a previous income year for the same termination N Death Benefit ETP paid to a non-dependant of the deceased T Death Benefit ETP paid to a trustee of the deceased estate The Institute of Certified Bookkeepers Page 10

11 Reportable Employer Super Payment Summaries must contain the amount of Reportable super contributions that an employer makes on behalf of their employees; this is known as RESC Reportable Employer Super Contributions. RESC includes contributions where an employee influences the rate or amount of super contributed for them. It includes additional contributions made above the compulsory contributions of 9% SGC. These reportable Employer Super Contributions are for contributions BEFORE-TAX and NOT AFTER-TAX. Therefore if an employee asks for additional superannuation to be taken from net pay, then this is NOT a reportable super contribution, but if an employee asks for additional super (salary sacrifice) to be taken before tax, then this is a reportable employer super contribution. See ATO link for further information, click here. Type of Super Workplace Agreement/Award Superannuation Employee Additional Super Employer Additional Super Employee Super Salary Sacrifice Employee Super Salary Sacrifice Question If an employee is receiving 14% super which is part of their award or workplace agreement is the additional 5% RESC? If the employee is asking for super to be deducted after tax is the super RESC? If an employer pays 10% instead of 9 % to every employee without choice If employees award states 9 % but they have elected to have a further $100 super per month deducted and paid to super before tax is the super RESC? If an employee chooses to have 50% of their salary put to super before Tax is the super RESC? RESC OR No NO NO NO YES YES Additional Note on Super (SGC) From July 1 st 2014 the rate increases to 9. 5%. If paying the final pay for the year in July, adjust the rate BEFORE you process the pay so that the super accrues at the new rate. If paying the final pay on 30 th June then adjust the rate after final pay has been processed The Institute of Certified Bookkeepers Page 11

12 Enter Reportable Fringe Benefit If an employee s total fringe benefit amount in the FBT year [1 April to 31 March] exceeds $2,000.00, the amount must be grossed-up by and report in the Reportable Fringe Benefit Amount column. Fringe Benefits Calculation: Benefits provided to employees that attract Fringe Benefits Tax are also included in payroll tax calculations. The taxable value of the Fringe Benefits uses the grossed up value being a gross factor of up to Grossed up value is the gross pay the tax office deems the employee would have had to earn to have paid for the benefit from his net pay. The benefit may including GST therefore to formulas are required Factor Calculation without GST Grossed up factor = 1 / (1 FBT rate) Therefore is FBT rate is 46.5% = 1 / ( ) = 1 / (0.535) = Factor Calculation including GST Grossed up factor = (FBT rate + GST Rate) / (1 FBT rate) x (1 + GST Rate) x FBT Rate FBT rate is 46.5% & GST 10% = ( ) / ( ) x ( ) x = / x 1.1 x = / = FBT Calculation Excluding GST FBT Calculation Including GST Employee Benefit not including 1,000 Employee Benefit including 1000 GST GST Factor Factor Taxable Value $1, Taxable Value $2, You must enter the grossed-up taxable value of fringe benefits received for each employee. If your employees have fringe benefits please contact the accountant of the client to discuss which of these needs to be included on the Payment Summaries. Review Individual Payment Summaries Untick any employees you are certain did not receive any form of pay in the payroll year just ended. (Check your payroll register report if you are unsure). Print 2 copies of the Payment Summaries one for the employee and one to keep on file for 5 years which is your legal obligation. Alternatively Print one copy for employees and Save the Payment summaries as PDF s on the computer. The Institute of Certified Bookkeepers Page 12

13 Verify your Payroll Information Add up the total tax withheld and the total Gross Payments on the Payment Summaries and compare with your payroll summary report for reconciliation. Note: If allowances are separately shown then reduce from total Gross wages. Treat ETP payments the same way. If there is a discrepancy you may have missed one employee when you chose to print the Payment Summaries (remember all employees that had payroll activity throughout the year are reported to the ATO so the EMPDUPE totals are probably right). Create the EMPDUPE File Your file can be saved on PC-formatted floppy disk or CD-ROM or hard drive. It must now be lodged electronically with the Tax Office. How to Lodge EMPDUPE file Electronically sending the EMPDUPE You can NOW lodge the EMPDUPE file via Electronic Process using ECI Lodgement or GOV Reports or the file transfer via your BAS agent portal. To do this you must:- 1. Gain authority from the client to add them to your BAS Portal (Refer: ICB resources/bas Agent) 2. Gain authority from the client to lodge the EMPDUPE File electronically (Refer: ICB resources/payroll) 3. Provide the client with a receipt of lodgement (GovReports provides this instantly) (Refer: ICB /GovReports) The Institute of Certified Bookkeepers Page 13

14 Electronic Lodging Processes via 1. Step 1 - Log onto GovReports Step 2 - Go to client by Select Client List Step 3 - Select Client and Form - Select PAYG Annual Summary Lodge Step 4 - Uploading an EMPDUPE file Choose Import EMPDUPE File, then click on Choose File & navigate to folder of your client s payroll and select EMPDUPE, this will upload into GovReports. Step 5 Select Read File, and view the information Step 6 - Once you are satisfied you can Pre-Lodge, which tests the information and then Lodge or you can Save & Lodge later Step 7 - If you have Pre-Lodge or saved and are ready to Lodge go to the Queue. Select Lodgement, Queue. You will see that everything you have Saved is listed and you can choose to Lodge All or only Lodge Selected Step 8 - Once lodged, you will receive acknowledgement which you send a copy to your client ATO Bas Agent Portal: Step 1: Access Portal - The file transfer facility is accessed from the Main screen. (See to the left and below). You DO NOT access the relevant client but this is a file lodgment facility that the ATO will administer separately to your client directory. Step 2: Select Lodge File Step 3: Select Lodge Step 4 Select Browse and navigate to folder of your client s payroll and select EMPDUPE file Step 5: Once the file is uploaded, tick box for AUSkey details declaration and SUBMIT Step 6: To check that your file lodged, Select File Status (see left) The Institute of Certified Bookkeepers Page 14

15 LASTLY, forward the PAYG Payment Summaries to the individual employees retaining a copy for your records. Note: If you discover you have made an error on one of your Payment Summaries it is possible to fix the problem and redo the above process as long as you have not moved onto Step 6 and rolled over your file and as long as you have not sent the Payment Summary to the employee or information to the Tax Office. You may payment summaries to employee s, however you must first receive consent from them to do so. Step 6 Close Payroll Year Take a backup and keep it as the master final payroll backup for that year. Next through the file menu select Start a New Year and Start a New Payroll Year. Then follow the instructions in MYOB. Step 7 Load Tax Tables If you have upgraded to the latest Accounting Software Follow the instructions to update the tax tables. To check that your tax tables have loaded correctly go to the setup menu select General Payroll Information. Make sure the tax table revision date is the 1/7/201X of the new payroll year. Amending Payment Summaries There are varying reasons why you would need to amend a payment summary and the following outlines just a few. Made a mistake with any of the amounts in your completed PAYG payment summary statement and you have already sent it to the ATO. Have amended any of the amounts of the payment summaries issued to payees Are sending payment summaries that you did not send before Incorrect RESC value There is a process that the ATO require you need to follow in sending an amended EMPDUPE file or NEW payment summary. Equally all amendments must be reported to the ATO within 21 days after providing the amended payment summary to the employee. Electronic Lodgment of the amendment Electronic EMPDUPE file, it is possible to lodge amended PAYG Payment Summary electronically with the ATO either using ECI or an electronic media. The following shows the process for MYOB & Reckon accounting software packages and manual process. The Institute of Certified Bookkeepers Page 15

16 Current versions of MYOB and Xero are unable to create an amended EMPDUPE file therefore our solution is to lodge the Amended Payment Summary EMPDUPE using GovReports a. Use MYOB or Xero to Re-Issue the Payment summary to the Employee/s b. Simply re-create the EMPDUPE with ONLY the payment summary that requires AMENDMENT and NOT all the payments summaries of the business. c. Access GovReports, load the EMPDUPE file and tick the Amendment flag in the Step 3 of the Lodgment process in GovReports. Lodge the Amended Payment Summary EMPDUPE using ECI, if possible and re-issue the payment summary to the Employee/s Manual Payment Summaries According to ATO the procedure for amending PAYG Payment Summary Statement is to complete a NEW PAYG Payment Summary statement, marking the amending a payment summary statement box with an X if you: You should then complete the amended PAYG Summary Statement in full, detailed ALL payment summaries issued by you for the financial year. The Institute of Certified Bookkeepers Page 16