End of Financial Year (EOFY) is a very busy time for payroll professionals. With this fast paced time of year, mistakes can often occur. We have identified 6 common mistakes that are made or overlooked during the EOFY period.......

 1. Not adding Reportable Fringe Benefits (RFB) to Payment Summaries 
Often forgotten on the Payment Summaries are the Reportable Fringe Benefits. This may be due to a number of reasons mainly the different reporting period required (April to March).It is extremely important to include the RFB as they are reported to the Australian Taxation Office, (ATO) and the employee may attract a different tax rate on these benefits. It is also used for a number of income tests.

2. Paying employees a cash amount during the year, and not processing it through payroll
Some employers  fall into the trap of making an “easy” payment to their employees through their Accounts department. Whist we recommend that all payments are entered through your payroll provider (Aussiepay), in the first instance we recognise that issues arise with your employees that may be outside the norm. It is very important that these figures are entered into the payroll as soon as possible once the payment is made. The amount that you have provided to your employee is the *net* amount. You will then need to:
 - Gross up the payment you have made
 - Deduct tax from this payment
 - Label the payment correctly. Is it a bonus, a back pay, an incentive of some type?
 - Add the payment to the Employees gross earnings for Payment Summaries.

3. Allowances and deductions not appearing correctly on payment summaries
Allowances and deductions often need to appear separately on the Payment Summary, it is largely dependent on the reason for the payment. The key is why you are making the payment not what you call it. Below is a link to the ATO with a table of common allowances and deductions for you to check if they should attract tax and where they appear.

Click here for the ATO Allowances and Deductions Table

Deductions are a little simpler – you are only required to show any Union or Professional association fees. 
 

4. Workplace Giving
All employee deductions made to a Workplace Giving program must be shown on the payment summary, regardless of how the deduction is processed through the Payroll.

There is a separate section on the Payment Summary specifically for Workplace Giving amounts. For more information about Workplace Giving, click here

5. Employee or Employer details not being updated, or overseas addresses
In order for you or your employees to receive their Payment Summary on time and you are not using our online services (or if the employee is terminated) we require all of the addresses to be current. Employees addresses are sent to the ATO each year in order for them to compare and check records with other government agencies.

Tax File Numbers (TFN) are also important. If an employee’s TFN is incorrect, the ATO will receive what has been provided in the payroll system. This may cause an issue for your employee, especially if the TFN is assigned to another person.

Your Employer details are also important, details such as your company name, ABN, signatory and address are also sent to the ATO.

6. Incorrect Payment Summary signatory
Not just anyone is able to be listed as an authorised signatory for Payment Summaries. Below is a link to the ATO to identify the authorised signatory for different entities:

Click here for the ATO Signatory table

As your Payment Summaries are produced by computer software, the person’s name is allowable in place of a signature.

For more information about how Aussiepay can assist you with a payroll solution and the burdens around EOFY, contact us via email or on 1800 729 765 today!