Types of Pay Items

Pay items are separated into eleven different categories. Each category causes the pay item to behave differently, for example a pay item in the payment category will increase an employee's income, while in the deduction category it will decrease income. The following categories are available:

• Reimburse Pay Item
• Taxation Pay Item
• Termination Pay Item
• Reserved Pay Item
• Payment Pay Item
• Deduction Pay Item
• Leave Accrual Pay Item
• Leave Non Accrual Pay Item
  • Leave Cashout
• Non Cash Pay Items
• Super Employee Pay Items
• Super Employer Pay Items

 

Any pay item settings which are greyed out have been either used in a pay item file or are not available to that pay item.

Adding a New Pay Item:

1. In Navigator select Company | Maintain Company Details | All Pay Items.
2. Select the type of pay item you want to add.
3. Click on the Add New button.
4. Complete the Details information as required for the pay item type - these are each described next.
5. Complete the information on the additional tabs, as necessary.

Reimburse Pay Items:

Payments made to an employee as a repayment for an expense incurred can be stored here. These items are never taxable as they are direct reimbursements for an expense incurred. Examples could be parking fees, air fares, taxi charges and so on. Reimbursement pay items are not included on the Payment Summary.

Taxation Pay Items:

This section contains two reserved items, used to deduct any taxation amounts over and above the reserved automatic withholding tax pay item:

• X01 can be used to make manual tax adjustments in the payrun
• X02 can be used where an employee wishes to make ongoing extra payments for example to cover an anticipated tax debt.
• It also includes a pay item "ZBT Automatic Backpay Tax", used to calculate tax on any backpay calculations processed in the system.
  

Termination Pay Items:

These pay items are required to process a termination payment for an employee. The pay item "TPE Lump Sum E" is used in backpay calculations, and the remaining 6 items cover all possible termination payments as defined by the ATO. You will never need to create additional termination pay items.

Reserved Pay Items

These pay items are reserved for internal use in payroll processing. You cannot add new items in this category, though you can edit general ledger codes and bank accounts (for payments to third parties). Examples include withholding tax, net pay and GST. Reserved pay items cannot be deleted.

Payment Pay Items:

This category contains any payments (gross or net) which will be made to employees, except non-cash, leave or non-accrued leave pay items. Examples of payment pay items include ordinary time, overtime, allowances or shift loading. A system-defined pay item for "ZBK Automatic Backpay" is also included.

Deduction Pay Items:

This category contains specific deduction types which will be withheld from an employee's pay, except manual tax or employee super contributions). You can also include bank account details for a third-party recipient, such as Centrelink.

Super-related deductions should be created in the super employee category so that the super deductions will display on superannuation reports.

Leave Accrual Pay Items

These items are used to pay leave amounts for which the employee accrues a balance such as annual, sick leave and long service leave. It may also contain pay items for other leave types if applicable. Accrued leave types have an extra tab which allows them to be linked to the general ledger leave provisions export function.

Leave Non-accrual Pay Items:

This category contains two reserved pay items for annual leave loading (taxable and non-taxable). You can create unlimited additional non-accrual leave items. These are leave payments which do not require an accrued balance, such as bereavement or study leave. Paid Parental Leave is included in this category, with the code ZPL. Any items in this category can be audited via the leave history and leave movements reports.

In addition to the standard general ledger export, two items, RDO accrual and Flextime can be exported to the General Ledger via Leave Provisions export.

Non Cash Pay Items

These are where the employer makes a payment on behalf of an employee in lieu of wages. They are primarily used in calculating the remuneration package and for FBT purposes. They are reported in the same section as the employer superannuation contribution on the payslip. If the item is reportable for FBT, check the reportable FBT box and key in the gross-up rate. These settings will be used to calculate the reportable FBT, displayed on a reportable fringe benefits report in the employee file.

Super Employee Pay Items

This category stores any employee super contribution deductions, whether super salary sacrifice or voluntary after-tax contributions. Any items created in this category will appear on your superannuation reports. Each item is linked to one specific super fund, and is available only to employees who are members of that super fund.

Super Employer Pay Items

You will not normally add items in this category: the system automatically creates the required pay items each time you create a new super fund.

These items are used to calculate the employer SGC contributions. Items in this category do not form part of an employee's gross income, but are instead paid directly to the superannuation fund.  One is percentage based and one is dollar based, and both items are linked to the new fund.

Additional Tabs

For each of the Pay Items you may also need to complete the remaining tabs:

General Ledger: If you use the general ledger function, click the General Ledger tab and enter the general ledger prefix for this pay item. In most cases the general ledger structure reflects the costing structure, allowing you to export payroll transactions to your general ledger as required.

Payroll Tax: If the dollar value of the pay item is part of your workcover liability, the Taxable box should be selected on the details tab in order to display this tab. Payments which have been costed to a selected state can be collated in a state payroll tax liability, used to calculate the premium payable in state payroll tax for that state.

Workers Comp: This is for Workers compensation liability. Payments which have been costed to a department can be collated under workplace for the purposes of calculating workcover liability. Select the Workplaces for which the pay item will accrue Worker's Compensation.

Percentage Definition: For the selected Pay Item, the value to be paid by an employee is based on a percentage of the total value of the Pay Items selected from the list. Select the items that you wish to include in the calculation.

Restrictions: This allows you to define various rules around maximum threshold levels, for any given Pay Item. For example, when an employee reaches 5,000 kms in a kilometre-based travel allowance in a financial year. Without Restrictions, this would mean the employee ceases to receive a non-taxable allowance, and thereafter would receive a taxable allowance for the remainder of the financial year.

With Restrictions you can define a "Transfer excess to substitute Pay Item" restriction rule (for example, kilometre amounts over a maximum of 5,000 kms could be transferred to a nominated substitute taxable Pay Item.

These are the available Restrictions:

• Restriction Type
• Hours/Units, Amount
• Frequency (Per)
• Financial Year, Calendar Year, Years of Service, Rolling 12 months, Payrun, Month or Quarter
• Action
• Display Payrun Warning message only, Display Payrun Stop message only, Truncate excess over threshold, Transfer excess to substitute pay item

Note: Restriction rules are not available for Percentage based pay items, Equivalence Pay Items, or ‘Reserved’ pay items.

Other Additional Tabs

Where applicable, additional tabs will also be available if you have selected the Accrue Leave option (Leave Definition), or the Equivalence option (Equivalence Definition).