1. Chapter Four Entitlements and Reporting Procedures
Payroll Accounting
Chapter Four
Entitlements and Reporting Procedures
Payroll Accounting

2. 4.1 Leave Entitlements
Annual leave entitlement is a minimum of 4 weeks per year. Personal leave entitlement is a required min of 10 days (2 weeeks)
Payroll Accounting

3. Annual Leave Entitlement
Full-time Employees :
38 hours
Annual leave entitlement is 4 weeks
Part-time Employees :
Entitled to these benefits on pro – rata basis
Payroll Accounting

4. Example
The annual leave entitlement for Tim, a part-time employee, is 4 weeks pro rata. The % of a full-time annual leave entitlement = 4 weeks/52 weeks = 7.692% If Tim works 10 hours this week, Tim will accrue 10 hours x 7.692% = hours annual leave (approximately 45 minutes) this week.
Payroll Accounting

5. Personal/Carer’s Leave Entitlement
Full-time Employees :
10 days per year
Part-time Employees :
Entitled to these benefits on pro – rata basis
Payroll Accounting

6. Example
The annual Personal Leave entitlement for Tim, a part time employee, is 10 days pro rata. The % of a full-time Personal leave entitlement = 2 weeks/ 52 weeks = If Tim works 10 hours this week, Tim will accrue 10 hours x 3.846% = hours personal leave (approximately 23 minutes) this week.
Payroll Accounting

7. Long Service Leave
Long-term employees after 10 years are entitled to long service leave which is extra leave over and above Annual Leave and Sick leave. Long Service Leave is not accrued until the entitlement period has been worked
Payroll Accounting

8. Example
Paul works a 38-hour week and is paid weekly. He is entitled to 6.5 days of long service leave accrual for each year worked, payable after 10 years Total LSL accrued = 6.5 * 10 = days = 13 weeks Annual LSL = annual LSL in days * hours worked per day = 6.5*38/5 = 49.4 hours p.a.
Payroll Accounting

9. Long Service Leave Rate
LSL accrual rate per week = No. Days LSL entitlement p.w. / 52 = [6.5*/5 days per week] / 52 = = 2.5%
Payroll Accounting

10. LSL and MYOB
Payroll Accounting

11. LSL and MYOB
Payroll Accounting

12. Termination Pays
Occur when employment ceases either through termination or voluntary resignation
Final Pay includes :
outstanding wages, including penalty rates and allowances
accrued annual leave and annual leave loading entitlements
accrued or pro-rata long-service leave (if applicable)
redundancy pay entitlements (if applicable).
Payroll Accounting

13. Determining Termination Pays
Determine the entitlements for long service leave and annual leave including leave loading.
Gross Pay
Superannuation Guarantee is not payable
Determine the PAYG Withheld on the termination pay.
Payroll Accounting

14. 4.2 Superannuation Guarantee
Employers by law are required to make contributions to their employee’s superannuation each pay of 9.5% if the monthly earnings exceed $450 ( OTE ) Super changes effective 1 July 2013 are outlined in the Appendix.
Payroll Accounting

15. What are Ordinary Time Earnings? What is NOT Ordinary Time Earnings?
Payroll Accounting

16. Superannuation Guarantee
Ordinary Time Earnings
Wages and salaries earned including annual leave and personal leave.
Allowances ( eg ) , Danger, shift
Payroll Accounting

17. Superannuation Guarantee
Not Ordinary Time Earnings
Overtime payments.
Leave loading
Allowances fully expended in the course of employment (eg car allowance, meal allowance)
Payroll Accounting

18. Checklist See the checklist on page 142.
This checklist from the ATO website is a handy reference for identifying the payments that are classified as Salary and Wages and OTE.
Payroll Accounting

19. Excluded from super support
Employees earning under $450 per month.
Employees under 18 years of age working 30 hours or less per week.
Employees paid to do work of a domestic or private nature for not more than 30 hours per week for a non-business employer.
Payroll Accounting

20. 4.3 Activity Statement Tasks
Remittance of PAYG Withheld
PAYG Withheld is remitted to the ATO along with a completed Business Activity Statement (BAS).
Tax payments may be made by:
Mail.
Electronic Funds Transfer.
Payment in person at the ATO.
Payment at a post office or post office agency.
Payroll Accounting

21. Remittance of PAYG Withheld
Payroll Accounting

22. Other Types of PAYG Withholding Reported on the BAS
Voluntary Withholdings - written agreement between a business (the payer) and a contract worker (the payee) to bring work payments into the pay as you go (PAYG) withholding system
Payroll Accounting

23. Other Types of PAYG
No ABN Withholdings – if there is no ABN on the supplier’s invoice or other document relating to the transaction, such as a quote or order form, the business must withhold 49% of the payment unless the total payment for the goods or services is $75 or less.
Payroll Accounting

24. The Business Activity Statement
Format of the BAS :
The BAS reports various taxes including PAYG Withheld, PAYG Instalments, GST and a range of other taxes.
Amounts owing, as well as credits, are totalled in the Summary
The net amount due (or refundable) is entered in Item 9.
Payroll Accounting

25. Payroll Items on BAS
Payroll Accounting

26. 4.4 End of Year Procedures End of Year Checklist See page 142
Before reporting on PAYG Withheld for the year, it is most important that the payroll data is correct
Typically a checklist like this will be taken to the workplace and used as a practical tool to ensure that payroll data reconciles and is systematically checked for irregularities.
See page 142
Payroll Accounting

27. PAYG Payment Summaries
PAYG Payment Summaries must be issued annually to all continuing and terminated employees by the 14th of July each year
Alterations to completed payment summaries are not permitted.
Care must be given to any particular special payments, e.g. lump sum payments where employment ceases, allowances, or back payments of wages paid.
Payroll Accounting

28. Annual Payroll Reporting to the ATO
Employers are required to report annually to the ATO in respect of payment summaries they have issued. The ATO provides a PAYG payment summary statement for this purpose.
Payroll Accounting

29. Payroll Tax
Monthly payroll tax obligations can be calculated in most computerised accounting software.
Payroll Accounting

30. Payroll Accounting