Check Settings and RESC Audit

3) If you want to record RESC payments that were made as part of a salary sacrifice arrangement (these amounts were deducted, pre tax, from the employee's earnings), you can do so on the Deductions tab in the Opening Balances. 

**NOTE: For deduction amounts to appear as RESC amounts on the income statement they must be a Pre-tax or salary sacrifice deduction and have the RESC check box ticked (this box is ticked by default against the 'salary sacrifice' deduction). 

Pre-tax deductions

If you want a pre-tax deduction to be recorded as a RESC payment on the income statements, you can either:

Do this manually in each pay run...

1. From within a pay run, click on the employee you want to record the RESC payment for and click the "actions" button; select "make a deduction"

2. Select a deduction category. For it to be recorded as a RESC payment, it must be a pre-tax deduction or salary sacrifice super.

3. Next, you need to select a super fund. This is important as a pre-tax deduction will only be recorded as a RESC payment if it's paid to a super fund.

4. Enter in the payment amount and verify all the values are correct.

5. Hit save Or set up a recurring deduction on the employee's Pay Run Inclusions page

Super Adjustments

The third way a super payment will be recorded as a RESC payment is if you make Employer Contributions (i.e. You pay the extra super; it is not deducted from the employee's earnings).

Again, you can either:

Make employer contributions "manually" in a pay run (e.g. for a once-off payment):

1. From within a pay run, click on the employee you want to record the RESC payment for and click the "Actions" button and select "Adjust Super"

2. Select the "Employer Contribution" adjustment type

3. Enter the contribution amount and check that all the values are correct

Or set up a recurring payment, on the employee's pay run inclusions page:

1. Click on Add in the Super Adjustments section

2. Select the contribution type

3. Choose the method that this amount will be arrived at

4. Enter the $ or % amount

5. Choose the effective date

N.B. You can decide here when the employer contribution will stop; click on the drop-down menu to see the available options.

Setting up Salary sacrifice where the amount changes each pay run

If you need to cater for the need to constantly change salary sacrifice amounts, you can do this by following the below process:

1. Set up a recurring deduction via the Employee File > Pay Run Inclusions page, but set the value to $0. This will ensure that there is a line in the pay run for the data, but the value is blank, ready to be entered.  

2. Run a pay run, and then export the pay run using the Pay run actions > Export pay run button

3. Within the export file enter the required deduction amount against each employee

4. Import the file back into the pay run using the Pay run actions > Import pay run button.

What do salary sacrifice payments look like in a pay run?

Once salary sacrifice payments have been added to a pay run, the amount will be displayed within the 'pre-tax deductions' field as shown below:

As it is a pre-tax deduction, the employees' taxable earnings will be reduced by the salary sacrifice amount.

Auditing RESC transactions

It is always best practice to review all RESC amounts made in pay runs to ensure they have correctly been assigned to be paid to a super fund. The ramifications of any other allocation (ie other than to the super fund) will result in employee amounts not being reported correctly on the payment summary/income statement and the employee may be requested to pay money to the ATO. To audit RESC amounts, follow these steps:

• Generate a 'Deductions Report' using the date range 'Financial Year' and filter the report by selecting the relevant RESC deduction category;

• Generate a 'Super Contributions Report' using the date range 'Financial Year' and filter the 'Contribution Type' to 'Salary Sacrifice'; 

• Compare the total $ amounts between both reports. Do they match? If yes, then all is well. If the amounts don't match, review each employee to identify where the difference lies.

• Once the differences are identified, you will need to fix them. The method used to fix this  depends on whether the amount comes from the employee's opening balance or from within a pay run.

• Once any corrections required are made, generate the 'Super Contributions Report' again and ensure the total amount matches the 'Deductions Report'.

Fixing RESC amounts incorrectly entered via a pay/update event

Fixing RESC amounts incorrectly entered via an Employee's Opening Balance

You will know that the issues stem from the employee's opening balance because the 'Deductions Report' will make reference to 'Opening Balance (2/07/2019)':                                                                                                     

If this is the case, refer to the "Opening Balances" section above.

Fixing RESC amounts incorrectly entered via a Pay Run 

NB: You are only able to rectify payments within a pay run in instances where super has not been paid for that period. This is due to the fact that you cannot unlock pay runs if super has been paid. If you are wanting to fix RESC amounts for pay runs where super has already been processed, you'll need to follow the instructions to fix via a pay/update event.

You will know that the issues stems from the pay run because the 'Deductions Report' will make reference to the actual pay run:            

What this looks like in a pay run is as follows:  

You can see that the deduction is set up as a manual payment. Rather, it should be set up to be paid to the super fund, for example: 

To rectify this, you can unlock the affected pay run, click the affected employee's name and update the 'manual payment' setting to 'super fund' and finalise the pay run again.

Fixing RESC amounts incorrectly set up via Pay Run Inclusions

If you have had to fix RESC errors, best practice is to ensure it doesn't keep happening on an ongoing basis. As such, you should double check any pay run inclusions set up for salary sacrifice deductions.  To do this, generate a 'Pay Run Inclusions' report to review any ongoing RESC. You will know an employee's pay run inclusion needs fixing if the deduction category is not set to be paid to a super fund.

For example, this RESC deduction set up is incorrect:

This RESC deduction setting is correct: