Training Session 14 05 02 2021 Payroll 2 payroll deduction and union 11

Summary

This video script delves into the intricacies of payroll management, highlighting the importance of understanding deductions such as union fees and uniform costs. It explains the structure of gross pay, superannuation contributions, and the tax implications, emphasizing that payroll deductions typically reduce net pay. The script also introduces the concept of salary sacrificing in Australia, where employees can opt to pay extra superannuation for tax benefits and additional contributions to their funds. It underscores the necessity for proper setup and management of such arrangements within the payroll system, and touches on other possible salary sacrifice benefits.

Takeaways

• 💼 Payroll deductions are a common occurrence, including union fees and costs for items like uniforms.
• 💰 Gross pay is the starting point for calculating an employee's earnings, from which various deductions are made.
• 🌐 Superannuation, similar to a pension, is a mandatory 9.5% contribution in Australia, but can be increased through salary sacrifice.
• 🔄 Salary sacrifice is an arrangement where employees choose to redirect a portion of their gross pay into superannuation for tax benefits.
• 💼 Payroll deductions typically come out of the net pay after tax and other mandatory contributions have been accounted for.
• 📋 Proper setup and management of salary sacrifice arrangements are crucial to ensure accurate payments into the designated funds.
• 💻 Employees may request to salary sacrifice for items other than superannuation, such as a computer or other benefits.
• 🔢 The payroll system is the mechanism through which salary sacrifice and other deductions are processed and managed.
• 🚫 It's important to be aware of what can and cannot be included in salary sacrifice arrangements to avoid errors.
• 🏦 Different funds may be involved in salary sacrifice, depending on the specific arrangements made at the beginning of employment.
• 📝 Employees should be informed about the implications of salary sacrificing, including the impact on their take-home pay and tax situation.

Q & A

What are payroll deductions mentioned in the script?

Payroll deductions in the script refer to union fees, costs for uniforms, or other employee-requested deductions that are subtracted from an employee's gross pay.

What is the typical order of deductions from an employee's pay?

The order usually starts with gross pay, then deductions for superannuation, followed by tax, and finally other payroll deductions which come out of the net pay.

What is the purpose of superannuation mentioned in the script?

Superannuation is a pension-like system in Australia where 9.5 percent of an employee's income is contributed towards their retirement fund.

What does 'salary sacrificing' mean in the context of the script?

Salary sacrificing is a voluntary arrangement where an employee chooses to have additional superannuation deducted from their gross pay for tax benefits and to contribute more to their retirement fund.

How does salary sacrificing provide a tax benefit?

By salary sacrificing, the employee reduces their taxable income, which can lower their overall tax liability.

Can salary sacrificing be applied to items other than superannuation?

Yes, the script mentions that employees might request to salary sacrifice for items such as a computer or other benefits, which is managed through the payroll system.

What is the role of the payroll system in managing salary sacrifices?

The payroll system facilitates the process of salary sacrificing by adjusting the employee's pay according to their requests, ensuring the correct amounts are deducted and allocated.

Why might an employee choose to pay for uniforms through payroll deductions?

Employees may choose payroll deductions for uniforms to spread the cost over time instead of paying a lump sum upfront, potentially making it more affordable.

How does the setup of salary sacrificing work?

Salary sacrificing is set up at the beginning of employment or when an employee makes the request, with the specific terms agreed upon and managed by the payroll system.

What happens if an employee wants to change their salary sacrificing arrangement?

The script does not specify, but typically, an employee would need to communicate their change in preferences to the payroll department, which would then adjust the payroll settings accordingly.

Are there any legal or regulatory considerations for payroll deductions and salary sacrificing mentioned in the script?

The script does not detail specific legal considerations, but it implies that proper setup and management of these processes are important, suggesting compliance with relevant laws and regulations.