August 3, 2020   |   Definitiv

How do I manage salary sacrifice arrangements with JobKeeper?

As confirmed by the ATO, salary sacrifice arrangements can count towards the $1,500 JobKeeper amount.

This article is to help you make sure that you are processing the salary sacrificing of JobKeeper amounts correctly in Definitiv.

In consultation with the ATO, when an employee is sacrificing a portion or all of their JobKeeper payment, you will need to follow our process below to ensure there are no errors returned on your STP submission.

Step 1: Creation of new pay item (Optional)

Technically step 1 is optional, however, if you wish to track and report the amounts paid to employees as a ‘top up’ we suggest creating a new pay item.

If you do decide to create a new pay item, the Category for ATO purposes must be set as Gross Payments and all other settings match the JobKeeper top up pay item requirements.

Alternatively, you can use an existing pay item, as long as the Category for ATO purposes is set as Gross Payments and again; all other settings match the JobKeeper top up pay item requirements.

JobKeeper Salary Sacrifice Pay Item

Step 2: Processing

When processing in a pay run, you will need to do the following;

  1. Assign the amount being sacrificed needs to the pay item with the Gross Payments ATO category; and
  2. Assign the remainder JobKeeper amount as normal, i.e. if stood down without pay to the pay item with the JobKeeper Top Up ATO category.

Example

An employee is currently stood down without pay by their employer. As they are not earning wages, they are receiving the full JobKeeper payment as a top up and would like to sacrifice $500 to superannuation.

To achieve this outcome, the following would need to be entered into Definitiv;

JobKeeper Salary Sacrifice Payroll

Step 3: Reporting/STP File

Once you have processed the above transaction, navigate to the STP Pay Runs report (located under Reporting > Payroll Reporting).

If you have processed the salary sacrifice as above, the amount and categorisation to the ATO via STP should be as the below screenshot.

JobKeeper Salary Sacrifice STP Reporting