Payment summary preparation is nearly upon us. There are many tasks you can do now to make the preparation and issuing of payment summaries by 14 July easier.
- Check all employees’ details for current addresses and tax file numbers
- Remove any full stops and commas from addresses
- Check terminated employees have a termination date
Before issuing payment summaries you must check that the payroll financial accounts are correct.
- Revise all reports: payroll register report, profit and loss, payroll entitlement report
- Reconcile total gross wages to payroll register YTD report to wages expense YTD
- Reconcile outstanding PAYG Withholding liability = unpaid PAYGW for the next BAS
- Reconcile unpaid PAYGW to balance sheet PAYGW liability
- Check PAYGW paid for the year equals payroll summary YTD tax
What Information is Required for Payment Summaries?
- Obtain the Fringe Benefit Tax reportable amounts
- Obtain the Reportable Employer Superannuation Contributions amount for the payment summary, especially when the accountant maybe managing the super contributions based on tax planning
- Check RESC superannuation contribution categories are correctly linked in payment summary
- Check payments made for terminated employees; if Employment Termination Payments were involved, were ETP payment summaries issued at the time of termination?
Changes for 2017 Payment Summaries
- Payment summaries must now show whether or not employers have an FBT exemption under Section 57A of the Fringe Benefits Tax Assessment Act 1986. There is now a specific box to state whether an exemption applies or not.
- An employee may change roles within an organisation that is eligible for exemption under section 57A. For instance, an employee of a state health department may work as a nurse in a hospital (57A exempt duties) for part of the FBT year and, in an administration role at head office (non-exempt duties) for the remainder. If you have an employee who performs both exempt and non-exempt duties during the year while receiving reportable fringe benefits, you will have to provide two payment summaries. If the combined value of the exempt and non-exempt fringe benefits exceeds $2,000 in the FBT year, you must provide the grossed-up taxable value of each fringe benefit on a separate payment summary. On one payment summary you will show the section 57A exempt reportable fringe benefits amount and select Yes. On the other payment summary you will show the non-exempt reportable fringe benefits amount and select No. No more than two payment summaries are required, even if the employee has several periods of exempt and non-exempt service. Report all of the exempt amounts in one payment summary and all of the non-exempt amounts in a second payment summary.
- Because of the changes to taxation rates for working holiday makers at 1 January 2017, for those registered working holiday makers who worked both before and after 1 January 2017, two payment summaries will be required, with the two different tax rates applying to the gross payments, depending upon the time of payment.
- There is now a specific box on the payment summary form required to show “gross payments type” which will be either S (salary) or H (registered working holiday makers).
Did you Know?
Payment summaries may be provided to employees electronically. You must advise employees how they can access their payment summaries and make available the means for viewing and printing the payment summary if requested. If emailing, they must be sent to a private email address held by the individual employee.
Make sure the method you choose to distribute electronic payment summaries to your employees is secure enough to protect the tax file numbers and other personal information, and to meet your obligations under privacy and taxation law.