Correctly Tax Employees’ Private Vehicle Use (AU)
Getting it right
If you have employees who use their own private vehicle for business purposes, the ATO states that they can claim some or all of the expenses. For kilometre (mileage) reimbursement, a cents-per-kilometre method can be used to work out the reimbursement. Under this method, there is a threshold that determines whether or not the allowance is taxed.
The easiest way to handle this in Affinity is to create a system code group called KMCODES then add the pay elements that you use to reimburse employees who use their private vehicle for company business. KMCODES will automatically detect whether to pay employees non-taxable or taxable allowances, based on the ATO’s threshold:
- Up to 5,000kms employees are paid the non-taxable allowance.
- After that, they are paid the taxable allowance.
You can create up to nine groups to handle different mileage rates, naming them KMCODES1, KMCODES2 etc. For the full step-by-step procedure, in Affinity press F1 to open the help then navigate to Code Groups > Practical Uses > Correctly Tax Reimbursement for Private Vehicle Use (AU).
Correctly Accrue Leave for Employees on Workers’ Comp (AU)
Employees on workers’ compensation can continue to accrue annual leave, sick leave and long service leave depending on the state or territory their employment is located in. In addition, the amount and the method used to pay workers’ comp to employees also depends on the state or territory of their employment. The amount paid is actually an insurance payment, not a wage. Employees are paid either by the insurer, by the insurer via the employer or by the workers’ comp regulator. Even if you are not making payments direct to employees, you may still need to create pay elements in Affinity that allow for leave accruals.
To make things even more complicated, some employees on workers’ comp return to work on reduced hours and/or alternative duties while recovering from an injury. Employees (in all states and territories) returning to work, accumulate annual leave and sick leave for the hours that they actually work. Some employees who return to work on reduced hours also accumulate annual leave and/or sick leave for their workers’ comp hours.
Making Affinity work harder for you
Ensure that your employee details are correct
Annual, sick and long service leave accruals for employees on workers’ comp change, depending on where they reside. Check employee masterfiles to ensure that:
- The residential state and post code are correct for each employee. If you use Dashboard or Employee Self Service, you can get employees to update these details themselves.
- Each employee is showing the correct state payroll tax scheme (State Payroll Tax field).
Tell the Affinity system which pay elements relate to workers’ comp
Create a system code group called WCCodes with an AU calc method then add the pay elements that you use to pay workers’ comp (and that you want leave to accrue on). If these same pay elements exist in your worked-hours config, remove them. This ensures that Affinity knows which pay elements are used to pay workers’ comp, so leave accruals are automatically calculated based the employee’s state and award.
For more information about states and awards, in Affinity press F1 to open the help then navigate to Code Groups > Practical Uses > Correctly Accrue Leave on Workers’ Comp (AU).
Focus On: Employee Masterfile Allowances/Deductions
Managing regular allowances and deductions
The grid at the bottom of the screen is where you record all of an employee’s regular allowances and deductions. Let’s look at some of its features.
- You can assign a rate to any allowance and deduction and it will override the rate assigned against the pay element. For example, if the MEAL allowance rate is 15.247 in the pay elements masterfile, but you want to pay an employee a rate of $16.001, select MEAL from the Pay Element lookup but enter $16.001 as the rate. That way, you can track and report on the payment of MEAL but at a specific rate just for that employee.
- Cap At, Payments Made and Balance to Pay work together to track the value of deduction and allowance payments up to a specific value (known as the ‘cap’). Each time a pay is processed, payments made and the balance left to pay are automatically updated. Once the cap is reached, the payment stops. Handy for deductions like court fines, and fixed-term allowances.
- At its most basic level, the status of an allowance or deduction determines whether or not it is currently active or inactive (will or won’t get paid). You can also enter a start/stop date that controls when payments start and stop.
- Super and KiwiSaver deductions are also recorded in this grid. Use the Reference field to record the employee’s fund member number.
- Aside from Super and KiwiSaver, the Reference field can be used to store any information that identifies a payment to a third party such as Inland Revenue or the ATO.
Pay Elements That Determine Where Payments Are Banked
In this edition of Did You Know, we look at pay elements that control how and where employee payments are banked.
Adding 1 unit of ALLBAL to a timesheet or pay adjustment means that the entire payment will be paid into the employee’s balance bank account. An option to pay to the employee’s balance bank account is available when processing back payments. Note: when grouping pay adjustments or grouping timesheets, ALLBAL will only apply to payments in the same group.
Enter 99 units of BNKAC0 into a timesheet or pay adjustment to stop disbursements to the employee’s balance account and instead pay them in cash for this pay only. Note: shows as ‘CASH’ on the banking schedule.
Add 99 units of BNKWKS to a timesheet or a pay adjustment to stop all disbursements that normally get paid into bank accounts 2 – 5, and instead pay everything into the employee’s balance bank account for this pay period. To pay multiple periods of all disbursements that normally get paid into bank accounts 2 – 5 for this pay period, add X units of BNKWKS to the timesheet or pay adjustment (X = the number of periods). For example, if a total of $100.00 is normally paid into bank accounts 2 – 5 in a single period, 2 units of BNKWKS will pay $200.00.
If you enter 1 unit of NOBNKD into a timesheet or type 2 pay adjustment, deductions that are normally direct-credited will be deducted from the employee but won’t be banked this period.
When Australian and New Zealand employees are terminated, TERMBL is automatically added to their pay adjustment. TERMBL ignores all other bank accounts and pays the employee’s net termination payment into an employee’s balance bank account.
Coming Soon: myPA Enhancements
You asked, we listened. Affinity myPA is now smarter and more automated than ever. We’ve kept the look and feel the same, but added extra goodies to make your work life easier.
Fully integrated with Query Manager
Got queries and reports all ready to share? Simply select and send in myPA.
Export information to a SFTP folder
You’ll soon be able to send data extracts straight to one of your organisation’s secure FTP folders.
Target the right audiences
The new myPA will let you send alerts, events and reminders to employees based on their position or their employment status (active, inactive), as well as to individual employees. There are also more options for distributing information to managers.
The new version of myPA is currently in testing, and will be released later this year. Look out for the Winter edition of Did You Know for more information.