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.

Outlines

00:00

💼 Payroll Deductions and Union Fees

This paragraph discusses the complexities of payroll processing, particularly the deductions that may be made from an employee's pay. It explains that gross pay can be reduced by various factors such as union fees, uniform costs, and other payroll deductions, which typically come from the net pay after taxes and superannuation have been accounted for. The speaker also ensures the listener is aware of the standard payroll process and its variations.

Keywords

💡Unions

Unions refer to labor organizations that represent the collective interests of workers and negotiate with employers concerning matters such as wages, working conditions, and benefits. In the context of the video, unions are mentioned as a source of payroll deductions where employees might be required to pay union fees, which are then deducted from their gross pay.

💡Payroll Deductions

Payroll deductions are amounts subtracted from an employee's gross pay for various reasons, including taxes, insurance premiums, and union fees. The script discusses how payroll deductions are typically taken out of the net pay, which is the pay after taxes and other deductions, and are an important aspect of the payroll process.

💡Gross Pay

Gross pay is the total amount of money earned by an employee before any deductions, such as taxes or benefits contributions. The video script mentions gross pay as the starting point for calculating an employee's final take-home pay after all deductions, including superannuation and payroll deductions, have been made.

💡Superannuation

Superannuation, often referred to as a pension in other contexts, is a mandatory retirement savings scheme in Australia. The script explains that a standard rate of 9.5 percent is paid into this fund, which is a key component of an employee's compensation package and financial planning for retirement.

💡Salary Sacrifice

Salary sacrifice is an arrangement where an employee gives up part of their future salary in exchange for non-cash benefits or contributions to a superannuation fund. The script discusses how employees can choose to salary sacrifice extra superannuation for tax benefits and additional retirement savings, which is managed through the payroll system.

💡Net Pay

Net pay is the actual take-home pay that an employee receives after all deductions, including taxes, superannuation, and payroll deductions, have been subtracted from their gross pay. The video emphasizes the importance of understanding net pay in the context of payroll processing and employee compensation.

💡Tax

Tax refers to the mandatory financial charge imposed by a government on a person's income or property. In the script, tax is mentioned as one of the deductions that reduce an employee's gross pay to calculate their net pay, highlighting its role in payroll management.

💡Uniforms

Uniforms are standardized clothing worn by employees in certain industries or companies. The script mentions that employees might have to pay for their uniforms, which would be deducted from their pay, indicating an additional payroll consideration.

💡Payroll System

A payroll system is a mechanism or set of processes that an organization uses to manage employee payments, including calculating gross pay, applying deductions, and issuing net pay. The video script describes how various payroll deductions and salary sacrifices are processed through the payroll system.

💡Employee Benefits

Employee benefits are non-salary advantages provided to employees as part of their compensation package. The script touches on salary sacrificing for additional superannuation and possibly other benefits like a computer, indicating the range of benefits that can be part of an employee's overall compensation.

💡Volition

Volition refers to the act of making a choice or decision. In the context of the script, employees are said to pay extra superannuation 'of their own volition,' meaning they choose to do so willingly, which is a key aspect of the salary sacrifice arrangement.

Highlights

Payroll deductions can include union fees and costs for employee uniforms.

Payroll process involves gross pay, superannuation, tax, and payroll deductions.

Payroll deductions are made from net pay after tax and other deductions.

Superannuation is a mandatory pension contribution of 9.5 percent in Australia.

Salary sacrificing allows employees to pay extra superannuation for tax benefits.

Salary sacrifice involves redirecting part of the gross pay to superannuation.

Extra superannuation payments can be made into a different fund if set up properly.

Salary sacrificing is a method to manage additional payments outside of the standard payroll.

Employees may request to salary sacrifice for items such as computers or other benefits.

Salary sacrifice requests should be set up correctly at the beginning of employment.

Payroll system facilitates the management of salary sacrifice arrangements.

Union fees are an example of payroll deductions that come out of the net pay.

Gross pay is the total earnings before any deductions are made.

Tax is deducted from the employee's pay before any other payroll deductions.

Salary sacrifice is a voluntary decision by the employee to increase superannuation contributions.

Salary sacrificing for other benefits is a flexible option within the payroll system.

Proper setup and management of salary sacrifice is crucial for accurate payroll processing.

Transcripts

okay so i mentioned to you about unions

um

so sometimes when we're doing payroll we

have to do some payroll deductions

um sometimes it'll be union fees um it

could be that the employees had to pay

for

a uniforms or something like that and

amounts need to be deducted so just so

that you're aware

there can be the gross pay there can be

the superannuation

then there can be some tax then there

can be some payroll deductions

uh usually payroll deductions will come

out of the net pay

um and so that all the tax and

everything will be taken out and then

there'll be a deduction

um i also wanted to talk to you just

briefly so you're aware of it so i

talked to you about superannuation

which which is like the pension that

gets paid 9.5 percent

um we have a thing in australia where

you can salary sacrifice

which means that particular employee

has asked for you to take extra

superannuation

out of their pay um it's

they're basically taking out of their

gross pay in order to get

a tax benefit but also they're paying

they want to pay extra superannuation

of their own volition over and above

into the fund so that needs to be set up

you know properly and it's managed

basically the payment is managed the

same it could go into a different fund

but that's all set up right at the

beginning

and then the payments are made employees

you might come across

salary sacrificing for other things

we've had people ask

you know can i salary sacrifice a

computer can i salary sacrifice

um you know other benefits and so

it's a similar thing that can happen and

it's done through the payroll system