Superannuation Procedures Overview
This article documents how to correctly set up both Compulsory Superannuation and Superannuation Sacrifice for Employees, in a step by step process.
It should be pointed out that while the setting up of deductions for superannuation going directly into the employee’s superannuation fund is similar, for the setting up or other types of allowances there are some important differences. Other Allowances will also be documented in this article.
Since both superannuation set ups are so similar, they will be documented together here. Where there is a difference this article will document Compulsory first followed immediately by Salary Sacrifice. The user then only has to read the documentation provided for either the Compulsory first or skip over it and read the documentation immediately after it for Salary Sacrifice.
For both Compulsory and Salary Sacrifice Superannuation, once a selection is made for either, SapphireOne automates the procedure to a great extent. While Compulsory super is basically the same for all, a Salary Sacrifice each employee will have different requirements.
In SapphireOne only a single allowance will have to be set up for each superannuation item for your payroll system. One for the Compulsory Super and another for Salary Sacrifice. For both the details, are then entered into the employee’s master record on the Superannuation Page.
Superannuation Bank Accounts
You will note that the SapphireOne demo Bondi Blue data file uses a single bank account for all types of Superannuation. It is however, recommended, for additional reporting a separate bank account should be created for each type of superannuation that is being collected by SapphireOne. If a single bank account is used it will difficult at a later date to perform detailed Superannuation reporting.
If a number of bank accounts are created a detailed report may be created for each bank account or a report may be created that merges the Superannuation Bank accounts. Please note it is a lot easier to merge reports than it is to separate them.
Step 1 – Create a Superannuation Deduction and/or Allowance
To do this go to Payroll/HR > Administration > Allowance Inquiry. SapphireOne will display the Allowances and & Deductions that are set up in SapphireOne.
The following screenshot shows the Allowances and Deductions that have been set up in the Bondi Blue Demo. The two allowances set up in are:
- SUPER – Superannuation Allowance
- SUPERSAC – Superannuation.Sal.sac
Creating a New Superannuation Allowance
While the feature name is Allowance as seen below, this item may be set up either as an Allowance or a Deduction with the appropriate radio button selection. Allowance will be set by default.
- Select the New button from the main tool bar. SapphireOne will then display the NEW Allowance screen with the default settings as seen to the right ready for the entry of data for the new allowance.
Creating a Compulsory Superannuation Allowance
- Any ID or name may be used but it is recommended that they are set as follows.
- ID – Super
- Description – Superannuation Allowance
- The Allowance radio button should be selected.
- For the Type from the drop-down menu select Before Tax. This is important as it is added to the employee’s income and not included with their normal taxable income.
- From the Calc Method drop-down menu and select Hours from the first drop-down menu.
- From the second drop-down menu select Wages.
- Do not select the Salary Sacrifice MP checkbox.
- From the Payment Summary Position Drop-down Select Not to Be printed.
- Do not make any selections from the Use This allowance When Calculating area. Leave them all unticked.
Creating a Superannuation Salary Sacrifice Deduction
- Any ID or name may be used but it is recommended that the ID and name as in Bondi Blue be followed.
- The Deduction radio button should be selected next.
- For the Type from the drop-down menu select Before Tax.
- From the Calc Method drop-down menu and select Fixed Amount by Period from the first drop-down menu.
- From the second drop-down menu select Deduction.
- Select the Salary Sacrifice MP checkbox. This will tell SapphireOne to create an MP once this pay is processed.
- From the Payment Summary Position Drop-down Select Not to Be printed.
- Do not make any selections from the Use This allowance When Calculating area. Leave them all un-ticked.
Step 2 – Entering Superannuation Details into the Employee’s Master Record
Now that we have the Superannuation details, we will set them up in the employee’s master record. To do this select the Employee Inquiry option from the Administration Menu at Payroll/HR > Administration > Employee Inquiry. This is the list of Employee’s from the Bondi Blue Demo and we will select as seen DB.
- To modify the Employee’s record you have to highlight and then select Modify.
- SapphireOne opens with the page displaying the first item on the drop-down menu the Details Page. No changes to make here so we will go and check the 4th Page on the list the Controls Page at Payroll > Administration > Employee Inquiry > Controls Page.
If this is the first time that this employee’s master record has been accessed all of the items seen in the list below should be checked.
- In all SapphireOne data files the following items must be used as follows:
- Superannuation is used for the Compulsory Superannuation component.
- Super.Contribution is used for the Salary Sacrifice component.
Note the following in the Bondi Blue data file that we are using as the example.
- The ID of SUPER with the name of Superannuation Allowance is for the Compulsory component.
- The ID of SUPERSAC and the name of Superannuation Sal. Sacrifice for the salary sacrifice component.
While the Superannuation is mandatory the Salary Sacrifice is optional. But it is recommended that both are set up now as one of your employee’s may want to salary sacrifice at a later date. If it is set up now, all the Payroll officer will have to do is access the employee’s Superannuation page of their record and enter in the required details.
- Check that both these have been entered into the correct data entry fields. SapphireOne will then insert the name or description into next column taken from the allowances master file. This is also a means to check that you have inserted the correct ID’s.
Types of Superannuation
There are two types of Superannuation that are payable for employees and the rules for these are set by the government. This reference manual will only be documenting the setting up of the two Superannuation payments as seen listed below in the SapphireOne Payroll system.
- Compulsory – This is usually a fixed amount and SapphireOne looks at the Superannuation allowance as displayed previously. This is the currently set at 10.5% by the Australian government and is payable in addition to the employee’s salary and is not taxed.
- Salary Sacrifice – This is set by agreement between the Employee and the Employer and SapphireOne looks at the Super Contribution allowance as seen above. The rate as a percentage or fixed dollar amount is set as requested by the employee. This is also payable before tax but is then currently taxed by the Australian government at 15%.
For example, an employee may be paying the maximum rate of 48% on their salary except the compulsory component. Any Salary sacrifice that they make will be removed from their taxable income before tax and then taxed separately at a rate of 15% (Within limits as set by the Australian Government).
Step 3 – Entering Employee Superannuation Details
When entering Compulsory or Salary Sacrifice Superannuation on the employee’s page, the only difference is the user’s selection of the Compulsory check box on each line. If selected SapphireOne will recogonise it as Compulsory Superannuation. If un-selected it will mark is as other types of Superannuation and treat it differently.
Navigate to Payroll/HR > Administration > Employee and select the Superannuation Page.
Superannuation Setup Details Area
This employee DB has been setup in Bondi Blue to demonstrate how both Compulsory and Salary Sacrifice superannuation may be setup.
- Compulsory Superannuation is selected by SapphireOne when the Compulsory check box is selected.
- To set up a superannuation payment for an employee use the keyboard short cut (Command /) or select the button to add in a new line as seen for the compulsory and salary sacrifice payments below.
- Payments for any superannuation to an employee may be made to multiple bank accounts as seen above for both types of superannuation. However, a single payment to a single bank account for an employee would be the most common arrangement.
- It should also be noted that for the compulsory payments the user will receive a warning if the compulsory payments do not total currently 10.5% of the employee’s salary.
In this new line enter the details in as required.
- Do not select the Compulsory check box and then enter the fund details. This will identify to SapphireOne that it is not Compulsory Super but Super Sacrifice.
- Finally enter in either a percentage of the salary or a fixed dollar amount to be used as the Salary Sacrifice.
- Once you have completed this select Save and this will close this screen and return you to the Employees Inquiry list.
Step 4 – Modifying the Employee’s Standing Transaction
- From the Payroll Menu select Standing Transactions Inquiry by navigating to Payroll/HR > Payroll > Standing Transactions Inquiry. Following is the list of Employee’s from the Bondi Blue Demo and we will select DB.
- To modify the Employee’s record you have to highlight as seen below then select Modify.
- Remember that these alterations to any employee’s record in a Standing Transactions Inquiry will make permanent changes to the employee’s payroll details.
- Temporary changes to the employee’s pay details may be made on a pay by pay basis in the Working Transactions function.
Line Details Area
- This area will display the existing line details entered into the Standing Paysheet Area when you highlight them.
- Alternatively when you select the button or the (Command / ) shortcut an new line will be added ready for data input into the Standing Paysheet area.
- The ID entry field is a linked field and the wildcard @ symbol may be used to bring up a full list of allowances to select from. This will allow the user to select the correct ID of the Allowance for inclusion in the Employees’ Standing Transactions.
If any alterations are made to an existing Superannuation Salary Sacrifice for any employee the line entry for the Sacrifice MUST be deleted with the button and then inserted again with the button or the (Command / ) shortcut to allow SapphireOne to re-calculate the Superannuation Salary Sacrifice Allowance correctly.
When the Employee’s Super Report is run prior to the End of Month the Salary Sacrifice will show under Contributions; Period, MTD and YTD.