Add or Edit a Pre-tax Salary Sacrifice Deduction (Non-Super)

Overview

If you have an arrangement with your employees that allows them to salary sacrifice amounts from their wages for items other than superannuation, you'll need to configure a Pay item and a Deduction item to process this. Some common examples would be a laptop or a novated lease.

Important: For these types of arrangements, your employee’s base pay will also need to be adjusted down so that their base pay combined with the salary sacrificed amount is equal to their total salary package. 

For details on Salary Sacrifice arrangements, please refer to the ATO. If you're unsure, please seek advice from your accountant or financial adviser before setting up these items in your Astute portal. 

Some useful links from the ATO:

Fringe benefits tax - A guide for employers

Salary sacrifice arrangements for employees

Superannuation Guarantee Ruling

Set up the Pay Item

To set up the pay item: 

1. Go to Config > Payroll > Pay Items
2. Add New Pay Item > select a region if applicable 
3. Enter a Name and optional Description 
4. Choose 'Pay' as the Pay Item Type and leave the Rate Multiplier as 1
5. In the STP Reporting Settings, choose 'Salary Sacrifice' in the Payment Section and 'Other' as the Salary Sacrifice Type
6. Select the Invoice Item Type and any other settings as required
7. Click Save

Set up the Pre-tax Deduction Item 

To set up the pre-tax deduction item: 

1. 1. Go to Config > Payroll > Deductions
   2. Add New Deduction > select a region if applicable
   3. Enter a Name and select a Calculation Type
   4. Tick the 'Enabled' option and enter a Start Date, set the Fixed ($) or Percentage (%) to 0
   5. Choose the Deduction Type 
   6. Tick the 'Pre Tax Deduction' check box
   7. Tick the checkboxes to indicate whether the item is exempt from super and Payroll Tax. 
   8. Select the Payment Section in the STP Reporting Settings section and nominate the Salary Sacrifice type as Other
   9. Click Save

Set up the Post-tax Deduction Item

In some arrangements, particularly novated leases, there may be a post-tax employee contribution as well as the salary sacrificed amount. In these instances you'll also need to set up a post-tax deduction: 

1. Go to Config > Payroll > Deductions
2. Add New Deduction > select a region if applicable
3. Enter a Name and select a Calculation Type
4. Tick the 'Enabled' option and enter a Start Date, set the Fixed ($) or Percentage (%) to 0
5. Choose 'Standard' as the Deduction Type 
6. Nominate a Payment Section in STP Reporting Settings
7. Click Save

Assign the Deduction Item(s) to the Employee

Once you have set up the deduction in config, you can assign it to the employee's profile for processing in payroll. 

1. 1. Go to Users > Employees > select the employee > Pay Item
   2. Click +Add Deduction
   3. Choose the deduction from the dropdown list
   4. Set a Start Date and an optional Finish Date
   5. Enter the Amount to be deducted from each pay 
   6. Repeat the above for all applicable deductions
   7. Click Save

Assign the Pay Item to the Employee

For ongoing salary sacrifice arrangements, you can set up the pay item as a Fixed Pay Item on the employee’s job, and reduce their base pay rate.

1. Go to Users > Employees > select the employee > select the active job > Job Details
2. Tick the 'Fixed Pay Items' option under Job Settings 
3. Update their base pay rate:
• For Fixed Timesheet jobs - edit the ‘Pay Rate’ 
• For Variable Timesheet jobs - click ‘Edit Rates’ > enter the new rates and dates > Add Rates
4. Click +Add Pay Item in the Fixed Pay Items section 
5. Choose the salary sacrifice pay item from the dropdown list
6. Enter the Units Per Pay, Rate, Start Date and optional Finish Date
7. Click Save

For one-off deductions like a laptop, the pay item and the adjustment to the base wages can be added directly into Process Payroll when it needs to be processed. The deduction still needs to be assigned in the employee’s profile so it can be selected in Process Payroll.

Pre-tax Deductions with no SGC Applicable

There may be some circumstances where you need to set up a pre-tax deduction that will reduce an employee's salary and wages for SGC purposes. For these types of deductions, tick the ‘Super Exempt’ option when setting up the Pay Item.  

To set up the pay item: 

1. Go to Config > Payroll > Pay Items
2. Add New Pay Item > select a region if applicable 
3. Enter a Name and optional Description 
4. Choose 'Pay' as the Pay Item Type and leave the Rate Multiplier as 1
5. Tick the 'Super Exempt' option 
6. Choose 'Not Applicable' in the Payment Summary Settings Payment Section
7. In the STP Reporting Settings, choose 'Salary Sacrifice' in the Payment Section and 'Other' as the Salary Sacrifice Type
8. Select the Invoice Item Type and any other settings as required
9. Click Save

Enter the Reportable Fringe Benefit Amount (RFBA) at EOFY

For some deductions, you'll need to record an RFBA value in the STP Update at the end of the financial year for amounts deducted between 1 April and 31 March (the FBT year). If this is required, work out the grossed-up value and add it into the RFBA field in the STP Update before you finalise and submit it to the ATO.