FNSPAY502 Process superannuation payments in payroll

Unit/s assessed:	FNSPAY501 process salary packaging arrangements and additional allowances in payroll FNSPAY502 Process superannuation payments in payroll
Assessment name:	FNSPAY501/ FNSPAY502 Assignment
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Complete the Declaration of Understanding and Authenticity (above). Once you have completed all parts of this Assessment, login to the Monarch Learning Management System (LMS) to submit your assessment. In the LMS, click on the link to Submit [assessment name] in your course and upload your assessment files. Click save and then click submit assignment. Please be sure to click continue after clicking submit assignment.

Activity instructions to candidates

• This is an open book assessment activity.

• You are required to read this assessment and answer all questions that follow.

• Please type your answers in the spaces provided.

• Estimated time for completion of this assessment activity: approximately 3-4 hours

Textbooks:

The following questions are based on the materials in the Digital Edition textbooks:

Provide Payroll Services: Functional Management and Processes 1^st Edition, July 2018

• Book 3 Process Salary Packaging Arrangements

• Book 4 Process Superannuation Payments in Payroll

These textbooks are provided chapter-by-chapter in your LMS as Digital Editions.

Online Payroll Software: Learn Now Practice Payroll System (KeyPay)

For some of the following questions you will be required to use the Learn Now Practice Payroll System (KeyPay online payroll software) together with the specific payroll file located in the Your Businesses list.

The required payroll file has already been created for you; however, you will need to create some Pay and Deduction Categories, perform a pay run and print certain documents. This may require you to learn how to use the KeyPay software by referring to online help provided within the KeyPay software. Many students find KeyPay user friendly and reasonably intuitive.

You will be advised in the relevant question(s) when you need to make use of the Learn Now Practice Payroll System KeyPay.

Use of the free trial version of KeyPay payroll software using the KeyPay public website was previously covered in your Module 1.1 BSBFIM502 Assignment for digital edition textbook.

You also used KeyPay in the exercises within your digital edition textbook at Module 3.3 FNSPAY501 titled: Chapter 3 - Process Salary Packaging Arrangements in Payroll System, specifically in chapter 3.2.

Important: Be sure to use the Learn Now Practice Payroll System (KeyPay online payroll software); this is not the public free trial used in Module 1.1 of your Diploma. This required system is accessed by using the following new web address https://learnnow.yourpayroll.com.au/

Your special login credentials for access to Learn Now Practice Payroll System (KeyPay online payroll software) should have already been provided to you by LearnNow. If you have not yet received these credentials, please contact Monarch Institute at info@monarch.edu.au and request these.

Little Pear Administration Pty Ltd

As an employer, Little Pear offers flexible remuneration plans through salary packaging to certain employees. Little Pear Administration Pty Ltd is not considered a concessional employer.

In your position as a Payroll Officer, you are required to calculate the benefits and costs associated with planned salary packaging arrangements.

Refer to the Little Pear Group Salary Packaging Policy to answer the following questions.

Question 1

Erick Hamilton, a management-level employee, wants to renew his Salary Sacrifice Agreement with Little Pear for the period 1 April 2019 through 31 March 2020.

Employment Contract (Extract):

Date of commencement 1 April 2017

Gross salary per annum $150,000

The gross salary is the earnings base used to calculate the compulsory 9.5% superannuation contributions paid by Little Pear Administration Pty Ltd.

Salary Sacrifice Agreement:

Novated Lease Agreement

Refer to the novation agreement.

Expense Payment Benefit

Mortgage repayments of $18,000 p.a. on private home

Exempt Fringe Benefits

Laptop valued at $3,000 net of GST (Primarily business use; GST is payable by the employer and can claim GST credits on this expense).

Payment of mobile phone plan costs $1,200 net of GST per annum (No private use declaration signed. Assume GST is payable by the employer and can claim GST credits on this expense.)

Other Salary Package Amounts

Additional superannuation contributions of $10,000.

NOVATION AGREEMENT This NOVATION AGREEMENT is made on 12/March/2019 BETWEEN the Financier, the Employer AND the Employee DETAILS The Employee has entered into the Lease Agreement with the Financier for the Motor Vehicle valued at $50,000. The Employee is employed by the Employer. The Parties have agreed to novate the Lease Agreement as set out in this Agreement. AGREEMENT 1. On the Effective Date the Employee novates to the Employer the Lease Agreement to the extent of the Lease Rights and Obligations. The Employer accepts the novation. 2. Under this agreement the finance lease is rescinded and the employees obligation to pay the lease rentals to the finance company is transferred to the employer for the term of the novation agreement. 3. The employer then makes all subsequent lease payments of $17,500 (net of GST per annum) directly to the finance company. 4. The lease payments will be charged against the employees remuneration package on a salary sacrifice basis. 5. The employer will pay FBT attributable to the vehicle. 6. The FBT cost will be charged to the employees remuneration package on a salary sacrifice basis. 7. The obligation to pay the running costs remain with the employee. 8. The employer, as lessee of the motor vehicle, provides it to the employee as a car fringe benefit for 70% private usage until the novation is terminated. 9. The Employee and Employer may mutually agree to terminate the Novated Lease. In the event of termination, the employee accepts the lease obligations. EFFECTIVE DATE 1/04/2019

1. a) The required documentation has not been kept in order to allow the company to use the operating cost method to determine the taxable value of the car fringe benefit. Therefore, the statutory formula method must be used.

Required: Use the statutory formula method to calculate the FBT payable in respect of the novated lease. (Where applicable show your workings).

Base Value	$50,000
Statutory Rate	0.20
Private Use %	70%
Taxable Value	50,000 x 0.20 x 70% = $7,000
Gross up Rate	2.0802
Grossed up Value	7000 x 2.0808 = $14,561.40
FBT payable	14,561.20 x 47% = $6,843.85

1. b) Calculate the FBT payable by the company in respect of Ericks salary packaging arrangement by completing the table below.

Type of Benefit	Benefit Value	Taxable Value for FBT (If applicable)	Gross up rate	Grossed Up value (If applicable)	FBT 47%
Novated Lease	17,500	7,000	2.0802	14,561.20	6,843.85
Mortgage Expense	18,000	18,000	1.8868	33,962.40	15,962.32
Laptop	3,000	NA	NA	NA	NA
Mobile phone plan	1,200	NA	NA	NA	NA
Superannuation contributions	10,000	NA	NA	NA	NA
Total	49,700	25,000		52,005	22,806.17

1. c) Evaluate the impact of the Salary Sacrifice Agreement on the employees gross salary per annum under the following scenarios:

• No salary sacrifice ($150,000 Gross salary plus super)

• Salary Sacrifice Agreement as detailed above

Include any Low and Middle Income Tax Offset (LMITO).

Refer to the Little Pear Group Salary Packaging Policy to learn about the FBT treatment.

Help Erick to compare the two options by completing the below table.

	No Salary Sacrifice	Salary Sacrifice
1. Package Value	150,000	150,000
2. Value of Benefits Provided		49,700
3. FBT Payable by Employer		22,806.17
4. = Salary Sacrifice Amount (=2.+3.)		72,506.17
5. Package Value less Sal. Sac. Amount = Assessable Income (= 1.-4.)	150,000	77,493.83
6. less Income Tax Payable	20,797 + ((150,000 90,000) x .37) = 42,997	3,572 + ((77,493.83 37,000) x 0.325) = 16,732.49
7. less Medicare Payable	150,000 x 0.02 = 3000	77,493.83 x 0.02 = 1549.87
8. add Tax Offsets (LMITO)	NA	530
9. = After tax pay (= 5.-6.-7.-8.)	104.003	59,741.47

1. d) Is this agreement beneficial to the employee? Why?

Yes, the agreement is beneficial to the employee even though the employee's take-home pay would be lower after taxes as a result of the agreement, the difference between the original amount and the new amount will be less than the value of the compensation package.

Question 2

Little Pear Administrations employee Lisa Hunt wants to enter a Salary Packaging agreement for the 2019/20 period that includes the following:

• Superannuation contributions up to the capped amount

• Purchased leave (refer to agreement)

• Loan from employer of $7,500 at 4% pa interest rate

Her gross salary is $135,000 plus superannuation.

Assume the benchmark interest rate is 5.2%. Ignore any Low and Middle Income Tax Offset.

PURCHASED LEAVE AGREEMENT Eligibility: Permanent full time and part time employees and fixed term contract employees with a contract of 3 months or greater duration may apply. PURCHASED LEAVE OPTIONS (Please tick appropriate box) to purchase 4 weeks over 12 months to purchase 3 weeks over 12 months to purchase 2 weeks over 12 months to purchase 1 week over 12 months Employee to complete: I hereby apply to participate in the Purchased Leave Arrangement. I have read, understood, and agreed to the terms and conditions of this Arrangement that are set out in the Little Pears Purchased Leave Policy and Guidelines. By signing this form, I agree to consent to recovery of any overpayment of salary or adjustment to leave entitlements and allowances if required. I understand that my participation in the Arrangement will commence from the earliest practicable pay period after this form is approved and submitted to the payroll area. I understand that the arrangement end date will be 31 March 2019. Applicants Name: Lisa Hunt Date: 20/01/2019 Delegated Authority Approval Approved Not Approved Name: Herman Reno Title: Human Resources Manager Signature: Date: 21/02/2019 Purchased Leave Commencement Date: 01/04/2019

Use the information extracted from Lisas Salary Packaging agreement to answer the following questions:

1. a) The concessional contributions cap is $25,000. How much can Lisa sacrifice to maximise her contributions without exceeding the cap?

Contributions Cap	$25,000
Employer Contributions	$12,825.00
Salary Sacrifice Amount	$12,175.00

1. b) What is the value of Lisas purchased leave benefit?

$ 135,000 / 52 = 2596.15 $ 2596.15 x 4 = $ 10,384.60

1. c) What is the taxable value of the loan for FBT purposes?

$ 7500 x 5.20 % = $ 390 $ 7500 x 4 % = $ 300 $ 390 - $ 300 = $ 90.00

1. d) Lisa would like to increase the loan amount and has asked if that is possible. Where could you find more information (i.e., in which company policy) about the benefits offered by Little Pear? If a limit applies within the company, specify the details.

Lisa can find more information in the Little Pear Salary Sacrificing Policy. There is a limit of 10% of an employee's gross salary, which for Lisa is (135500 x 10%) $13,550.00

1. e) What legislation or regulation should you refer to, to confirm the concessional contributions cap amount in Lisas salary sacrifice agreement?

Superannuation Legislation Amendment Regulation 2013

Question 3

Todd Williams works for Little Pear Administration Pty Ltd as a sales executive. He was recently promoted from sales trainee and he is considering salary packaging meal expenses in the next FBT period 2019/20.

Current employment contract (without packaging) extract:

Full-time

Gross Salary $80,000

After-tax pay $61,933 (after allowing for $1,080 tax offset).

Salary Package information:

Meal expenses benefit - $5,500 (including GST)

1. a) Calculate the costs incurred by the employer in relation to providing the meal expenses for Todd (show your workings).

Meal expenses (incl. GST)	$5,500
FBT	$ 5,500 x 2.0802 = $ 11,441.10 $ 11,441.10 x 47 % = $ 5,377.32
Input tax credit	5,500 / 11 = $ 500
Total cost to the employer	5,500 + 5,377.32 - 500 = $ 10,377.32

1. b) Todds after-tax pay with the salary sacrifice option would be $54,809 (includes LMITO). Calculate and show your workings for the total benefit value for the package.

According to Little Pear Salary Packaging Policy, would this agreement be accepted or rejected? Explain why it is accepted or rejected.

54,809 + 5,500 = 60,309 Little Pear has no limit on benefits to be included in the Salary Package however may refuse a request if it is considered ineffective for the employee, this agreement would not benefit Todd as the take home amount is less after salary sacrifice than it would be without

1. c) Use Little Pears letter template below, to briefly advise Todd on his current employment situation and the reason why his salary sacrifice application has been accepted or rejected.

LITTLE PEAR CONFIDENTIAL LETTER Date: 20/20/2023 To: Todd Williams From: Lisa Mathews - Payroll Subject: Salary Sacrifice Application Outcome of Application: Rejected Reason: When we compare your non salary sacrificed option and your salary sacrifice option, the salary sacrifice option results in a lower take home amount for the employee. Little Pear Salary Packaging Policy states "Little Pear may refuse any requests if the benefit or benefits are considered ineffective for the employee", it is for this reason we have rejected your application. Signature: Lisa Mathews

Question 4

Little Pear Logistics Pty Ltd has decided to open a new warehouse in Dubbo, NSW. Harry Chadstone, a Little Pear Administration Pty Ltd employee, has agreed to move from Melbourne to Dubbo for 4-6 months, to help get the new warehouse running and to train new staff.

Harry is earning $792 per week after tax (or $961 before tax) and will receive a Living Away From Home Allowance (LAFHA) of $260 per week. (The LAFHA is considered a non-taxable allowance by the ATO).

1. a) Complete the below table to outline the impact of the allowance on Harrys pay. Explain the impact of the allowance on tax withheld.

Gross wages	961
Allowances	260
Tax withheld	169
Net payment	1052
Explain the impact of the allowance on PAYG withholding: The LAFHA is not considered taxable so it has no impact on PAYG Withholding .

1. b) What external and/or organisational source should be accessed for information on an employees eligibility for an allowance in this workplace and role?

The award , enterprise or registered agreement that the employee is engaged under . Fringe Benefits Tax Assessment . Fair Work Act. The employee 's employment contract . The employee 's personnel file . Any documentation of the employees other related expenses ( fuel receipts , expenses reports)

Question 5

Peter Hanson works in a service company in VIC. Peter is paid weekly. His employment is covered by an Enterprise Agreement. The following is extracted from the Agreement:

• His standard pay is $1,711.54 for a 38-hour week.

• Space, height, and dirt money allowance is paid at 3.5% of hourly standard rate for all hours.

• Peter is paid $0.78 per km for using his own car for work related travel.

• He is also paid $6.17 per day as first-aid officer.

• Peters employment contract includes a salary packaging term: Peter is to sacrifice $250.00 gross wages per week and in return the company pays for his education. This education is work related.

• For the week ending 7/04/2019, Peter worked for 38 normal hours (5 days) and travelled 300 km for work in his own car.

Required:

1. a) Calculate the value of allowances to be included in Peters pay run for the week. Show your workings.

Allowance	Workings	Amount $
Space, height, and dirt money allowance:	1711.54 / 38 = 45.04 ( standard hourly rate ) 45.04 x 3.5 % = 1.5764 1.5764 x 38 = 59.90	$ 59.90
Car allowance:	0.78 x 300 = 234	$ 234.00
First aid officer allowance:	6.17 x 5 = 30.85	$ 30.85
Total Allowances:	59.90 + 234.00 + 30.85	$ 324.75

1. b) For the allowances(s) in part (a) above, determine the following (show your workings):

Item	Workings	Amount
Amounts that are subject to PAYG withholding	59.90 + 30 + 30.85	$120.75
Amounts that form part of ordinary time earnings (OTE)	59.90 + 30.85	$90.75

1. c) Outline how the payments in part (a) should be reported on Peters PAYG payment summary.

Space, height, and dirt money allowance as well as first aid officer allowance would need to be included on Peter's payment summary, included in the gross payment. Car allowance would need to be included on Peter's payment summary, shown separately in the allowance box with explanation

1. d) To perform this exercise, use the Learn Now Practice Payroll System (KeyPay online payroll software) with the specific payroll file located in the Your Businesses list. The required payroll file has already been created for you.

Refer to the Activity instructions to candidates section at the beginning of this assignment.

Please be certain to use the business file named FNSPAY501&502 2 Assessment EDU####### (where EDU####### will show your unique number). Do not use any other file.

You can access the payroll software here https://learnnow.yourpayroll.com.au/

Note:

The required payroll file has already been created for you; however, you will need to create some Pay and Deduction Categories, perform a pay run and print certain documents. This may require you to learn how to use the KeyPay software by referring to online help provided within the KeyPay software. Many students find KeyPay user friendly and reasonably intuitive.

Tip: Another very useful and relevant reference is this ATO web page (below) to help you determine for which categories you are required to withhold PAYG, if and where to include on a Payment Summary and if superannuation guarantee applies:

https://www.ato.gov.au/Business/PAYG-withholding/Payments-you-need-to-withhold-from/Payments-to-employees/Allowances-and-reimbursements/Withholding-for-allowances/

Required:

Based on the information above in this question, process a weekly pay run for Peter Hanson in KeyPay.

Your pay run should include ordinary hour wages, the above allowances and deduction for salary packaging.

The pay period starts 1/4/2019 and ends 7/4/2019. The pay date for the pay run is 8/4/2019.

At the end of your pay run, download the PDF copies of this weeks pay slip and a PAYG Payment Summary for Peter Hanson for the full 2018/19 financial year.

Take a clear screen shot of each document and insert an image of each into each box below.

Question 6

Hawthorn International Pty Ltd has not complied with the Superannuation Guarantee Scheme for their three employees. Their superannuation guarantee percentage is 9.5%.

Employees have been provided with annual superannuation support equivalent to only 6% of their earnings base. These amounts were paid to their nominated superannuation funds.

The employees earnings base for quarter 2, 2018/19 was the ordinary times earnings of $56,000. The employees total earnings including overtime for the quarter was $84,000.

Hawthorn Pty Ltd lodged a SGC Quarterly Statement on 20 February 2019.

Required:

For quarter 2, calculate following:

1. a) Calculate the amount of superannuation guarantee Hawthorn would have already contributed to a complying fund. (Show you workings).

56,000 x 6 % = 3,360

1. b) The employees shortfall percentage and the shortfall dollar amount. (Show your workings).

(9.5-6)/100 x 84,000 = $2,940

1. c) Calculate the nominal interest component. Assume 365 days in the year. (Show your workings).

2,940 x 10% = 294 294 x (151/365) = $121.62

1. d) The administration component. (Show your workings).

20 x 3 = $ 60

1. e) The aggregate Superannuation Guarantee Charge ($ amount). (Show your workings).

OTE : $ 56,000 Total Wages : $ 84,000 Super paid by cut off date : $ 3,360 Super paid by cut off date to nominated fund : $ 3,360 Total SG contributed by cut off date in % : 3360/56000 x 100 = 6 % SG paid to employees nominated fund in % : 3360/5600 x 100 = 6 % Notional quarterly shortfall in $ : ( 9.5-6)/100 x 84,000 = $ 2,940 SG shortfall : ( 9.5 - 6 ) / 100 x 84,000 = $ 2,940 Choice Liability : 0.25 x ( 2,940 - 2,940 ) = 0 Total shortfall amount : $ 2,940 Shortfall amount + admin fee + interest : 2,940 + 60 + 121.62 = $ 3,121.62

One of the employees, Gary, has asked you for explanations of the different types of superannuation funds. Gary is currently with a retail super fund and is thinking about switching to a different type of fund.

Explain the characteristics of the following types of super funds to Gary:

1. f) Defined benefits funds

A member 's final super benefit is calculated using a formula based on the final salary and number of years employed by a company or government department . Typically offered buy government or corporate super funds .

1. g) Corporate funds

Generally , fud memberships are only open to employees that are working for that company , in some cases ex-employees or relatives of existing employees may be fund members .

1. h) Self-managed super funds (SMSF)

Controlled and managed by the members of the fund, giving them a high level of control and flexibility. To be a SMSF they must: Have less than 5 members If the trustee of the fund is a company each director must be a member. Each member of the fund is an individual or director of the corporate trust. Nonmember of the fund is an employee of another member unless they are relatives. No trustee receives any remuneration for duties or services performed as trustee.

1. i) Gary wants to know if he is eligible for government co-contribution. List all the eligibility requirements for him, any income thresholds that may apply and details of any eligible income test.

Note: There is also a separate but related video role play task to perform at Q10 at the end of this assignment.

To be eligible for government co-contributions Gary must: .Have made at least one super contribution during the FY Be under 71 at the end of the FY Lodge his tax return for the relevant FY Not hold a temporary visa at any time during the FY Not claim the personal contribution as a tax deduction Have a total super balance less than the transfer balance cap at the end of 30 June the previous FY Not have contributed more than the non-concessional contributions cap Pass the two income tests: o 10% eligible income test: 10% or more of the total income must come from employment related activities, carrying on a business or a combination of both o Income thresholds: If an employee's total income is equal to or less than the lower threshold ($37,697 for 2018-19) and they made personal contributions of $1,000 they will receive the maximum co-contribution of $500. If an employee's total income is equal to or greater than the higher threshold ($52,697 for 2018-19) they will not be entitled to a co-contribution. If an employee's total income is between the two thresholds their maximum entitlement will reduce progressively as their income rises.

Question 7

1. Calculate Little Pear Administration Pty Ltds superannuation expense for the month of September using the following information: (Show your workings for superannuation).

	For month of September
Employee	Salary	Annual Leave	Sick Leave	Overtime	Allowance	Superannuation (Show your workings)
David Reed	$6,100	$469	$300	$600	$180 dry cleaning	6,100 + 469 + 300 = 6,869 6,869 x 9.5 % = $ 652.55
Carol Wright	$3,732	-	$144	$250	$50 first aid	3,732 + 144 + 50 = 3,926 3,926 x 9.5 % = $ 372.97
Debra Foy	$2,180	-	-	$445	-	2,180 x 9.5 % = $ 207.10
Michael Green	$4,920	$378	-	-	$250 car allowance	4,920 + 378 = 5,298 5,298 x 9.5 % = $ 503.31
John Mills	$11,600	$892	$446	$125	$350 travel allowance	11,600 + 892 + 446 = 12,938 12,938 x 9.5 % = $ 1,229.11
Peter Black	$400	-	$15	-	-	Nil because under threshold
Total						Total $ 2,960.29

2. Mention two different ways to keep these records secure according to the company policies and following the Privacy Act requirements.

- Personal information only collected where reasonably necessary and after collection can only be disclosed with consent and necessity . - Get software protection to prevent unauthorised access to private information

3. One of Little Pears employees wants to choose a non-complying super fund and he asks you for general guidance. Explain the differences between a complying and non-complying fund and how this might affect the employees future savings?

Contributions to a complying super fund usual counts toward meeting employer SG obligations. Complying funds are defined under the Superannuation (Supervision) Administration Act 1993 to include regulated funds that are an Australian funds at all times during the income year, and comply with the regulatory requirements of SISA, the Financial Sector Act and the Corporations Act. Complying super funds generally qualify for concessional tax treatment on taxable income, which is 15%. A non-complying fund is not a resident of Australia or has bee issued with a notice of non-compliance because it does not comply with RISA provisions. Non-complying funds do not receive concessional tax treatments on taxable income and are taxed at 45%. The employee's future savings would be greatly decreased due to non-complying super funds not receiving the concessional tax treatments and taxable income being taxed at the higher 45%.

4. As an employer, would you choose a defined benefit or accumulated superannuation fund for your employees? Explain your answer.

As an employer I would choose an Accumulated Fund because the risk of losing investment money is on the employee ( whereas with defined benefit funds the employer bears the market risk )

5. Use the following information from Little Pears executive managers to fill the table below about Little Pears salary and superannuation expenses for the 2018/19 period.

To calculate the income tax, assume the 2018/19 regular marginal individual income tax rates for Australian residents (claiming the tax-free threshold) apply and do not consider any children or other circumstances, apart from LMITO if applicable. Also add Medicare Levy to determine the total Income Tax Payable (for the table).

Any Salary sacrificed super contribution will not reduce the employers SG obligation according to the employees contract.

All employees have superannuation fund balances of less than $500,000 and have available carry-forward concessional super contributions. No employee will exceed the concessional cap amount.

All employees are considered to have private health insurance and do not claim any health insurance rebates for tax purposes.

Show your workings and justification for your values.

Information:

Lauren Lucas is Little Pears production manager and has a gross salary of $85,000 per annum. She entered a salary packaging agreement with Little Pear to sacrifice $8,700 as superannuation contributions. Since Lauren exceeded all the production requirements, she received a $25,000 bonus.

Harrold Waters, Little Pears CFO, has a gross salary of $230,000 and salary packages $4,000 into his superannuation.

Oliver Park is Little Pears retail director. His gross annual salary is $150,000 and he has a salary packaging agreement with Little Pear to sacrifice $6,500 into his super. He made a personal contribution of $5,000 into his superannuation. Oliver meets all the eligibility criteria and is claiming a deduction for his personal super contributions. Since 95% of Little Pears stores exceeded their sales target, Oliver received an $18,700 bonus.

Katy Reed is the general manager of Little Pears customer service and her gross salary is $75,000. She did not receive any bonuses this year and decided to make a personal contribution to her superannuation of $1,000. Katy meets all the eligibility criteria and is claiming a deduction for her personal super contributions. She has a salary packaging agreement as well and she sacrifices $5,000 into her superannuation. Katy has a motor vehicle allowance included in her employment contract for $1,500 (the ATO have deemed this reasonable and exempted from PAYG withholding).

Complete this table:

For 2018/19 year [show your workings in each cell]		Taxable Income		Income Tax Payable (incl. Medicare Levy)	Total Superannuation Payable
Lauren Lucas		85,000 8,700 + 25,000 = 101,300		LMTO:530 ((101,300-90,000) x 0.015) = 360.50 27,004 360.50 = 26,643.50	85,000 + 25,000 = 110,000 110,000 x 9.5% = 10,450 + 8,700 = 19150
Harrold Waters	230,000 4,000 = 226,000		54,097 + ((226,000 180,000) x 0.45) = 74,797 226,000 x 0.02 = 4,520 74,797 + 4520 = 79,317			Harrold earned over the max contribution base so calculations are made on 54,030 per quarter (216,120 per year) 216,120 x 9.5% = 20,531.20
Oliver Park	150,000 6,500 5,000 + 18,700 = 157,200		20,797 + ((157,200 90,000) x 0.37) = 45,661 157,200 x 0.02 = 3,144 45,661 + 3,144 = 48,805			150,000 + 18,700 = 168,700 168,700 x 9.5% = 16,026.50 16,026.50 + 6,500 = 5,000 = 27,526.50
Katy Reed	75,000 1,000- 5,000 = 69,000		3,572 + ((69,000 37,000) x 0.325) = 13,942 69,000 x 0.02 = 1,380 LMITO:530 13,942 + 1,380 + 530 = 15,852			75,000 x 9.5% = 7,125 7,125 + 5,000 + 1,000 = 13,125

6. What is the total gross salary expense for Little Pear? (Do not include any bonuses, allowances, packaged or sacrificed amounts)

Employee	Salary Expense
Lauren Lucas	85,000
Harrold Waters	230,000
Oliver Park	150,000
Katy Reed	75,000
Total	540,000

7. What is the total mandated super contribution expense for Little Pear? (Note: superannuation guarantee).

Employee	Mandated super contribution expense
Lauren Lucas	10,450
Harrold Waters	20,531.40
Oliver Park	16,026.50
Katy Reed	7,125
Total	54,132.90

8.On 10 January 2019, an employee earning $17,500 was paid superannuation for the Oct Dec 2018 quarter at the rate of 5% to her chosen fund. No other amounts were paid for her for this quarter. What is the consequence of the shortfall?

Required:

To answer this question, complete the following statement and list what this is made up of.

Fill-in the last missing word in this statement:

The consequence is that the employer incurs Superannuation Guarantee Charge fill in the missing word of the sentence).

This is made up of (list 3 components):

Shortfall Amounts An Administration Fee An Interest Component

Then, calculate the liability Little Pear must report to the ATO.

Calculate the liability:

Calculation Worksheet for Shortfall Amounts
Step 1: Gather quarterly required information
Employees OTE	17,500	A
Employees total salary/wages	17,500	B
Total super contribution paid by the cut-off date	17,500 x 0.05 = 875	C
Super contribution paid by the cut-off date to the employees nominated funds	875	D
Step 2: Preparation calculation
Total SG contributed by cut-off date in %: C A x 100	(875/17,500) x 100 = 5%	E
SG paid to the employees nominated fund in %: D A x 100	(875/17,500) x 100 = 5%	F
Notional quarterly shortfall in $: (9.5 - F) 100 x B	(9.5 5) /100 x 17,500 = 787.50	G
Step 3: Calculation shortfalls
SG shortfall (9.5 - E) 100 x B	(9.5-5) / 100 x 17,500 = 787.50	H
Choice liability 0.25 x (G - H)	0.25 x (3,150 3,150) = 0	I
Step 4: Total shortfall amounts and calculate total SGC
Shortfall (H + I)	787.50	J
Interest on shortfall amount: (show your workings here)	$787.50 x 10% x (151/365) = $32.57
Administration Fee: (show your workings here)	20,00
Super Guarantee Charge (Shortfall + Interest + Admin Fee):	$787.50 + $32.57 + $20 = $840.07

9. Write a short memo to your colleagues outlining why superannuation is best paid in full, and on time.

Tip: Reflect on your calculation above; consider whether the business is worse off or not, because of the late and incorrect calculation. Also mention whether or not this amount is tax deductible to the employer business.

LITTLE PEAR ADMINISTRATION --- MEMO

DATE: 21/2/2023

TO: The Board of Directors, Head of Human Resources, Department Managers,

Franchisees of Little Pear

FROM: Lisa Mathews - Payroll

SUBJECT: Superannuation payments

Good morning,

This notice is regarding superannuation obligations and why it is important that we make

payments on time and in full. If we do not make payments on time and in full, we incur a Superannuation Guarantee Charge which is a collation of the shortfall amount plus an administration fee and interest.

This SG Charge is usually greater than the original SG contributions and the original SG

amount is tax deductible while SG Charge is not tax deductible. We must also be checking calculations to avoid payment of the incorrect SG Contribution, if we fall short of the mandatory 9.5% we also incur the SG Charge, if we make this mistake for even one employee we can be charged hundreds of dollars.

Kind regards

Lisa Mathews

Question 8

As a part of your companys onboarding procedures, new employees are required to complete and submit a Superannuation Standard Choice Form and Tax File Number Declaration Form. The information is then recorded in the payroll system.

In the past, this has been an informal process handled by the new employees manager. Concerns have been raised that the lack of formalised procedures may have resulted in employees personal information being handled in ways which do not abide by the Fair Work Act and/or Privacy Act.

These concerns have been raised due to two incidents brought to the attention of the CEO.

1. An internal audit of payroll records identified a number of Superannuation Standard Choice Forms not being filed in the paper or digital records systems.
2. completed salary packaging agreement, by a manager. The manager had asked the assistant to record the superannuation standard choice form details in the payroll system. The assistant had then divulged the employees salary to other staff.

The company has grown rapidly over the past two years, to now have annual turnover in excess of $6 million. The decision has been made to remove responsibility for HR functions from departmental managers and to employ an HR Manager.

You have been asked to draft new procedures to be included in the onboarding procedures, covering the handling of the following documents:

• Superannuation Standard Choice form

• TFN Declaration Form

• Salary Packaging Agreements

1. a) Which staff should have access to these three completed documents listed above? Why?

Only limited people should have access to these documents as they contain confidential information and as such should be treated that way , some of the people that will should have access are the employee , payroll staff , accountant , and HR Manager .

1. b) Who do you think the new employee should hand the completed forms to? Why?

The employee should hand completed forms to the HR Manager as they can save the documents into the employees personnel file (which is also confidential) and only allow access to those that need the information.

1. c) What should that staff member do after receiving the forms? Why?

Save them into the employee's confidential personnel folder, accurately enter data into any necessary software, file any physical forms in a lockable location

1. d) What record keeping requirements apply to these completed forms?

Superannuation Standard Choice form:

Must be kept for 5 years for taxation and 7 years as part of employee records. The original signed form should be saved physically or electronically. Should be kept confidential, only the employer, payroll staff or authorised person (e.g.,accountant) should be able to see the record. SGA legislation requires records be kept for 5 years and the ATO requires records to be in English and be retained for 7 years. Electronic records must be easily accessible. There are penalties for failing to keep accurate records

TFN Declaration Form:

Must be kept for 5 years for taxation and 7 years as part of employee records. Can only be used to collect TFN's when required and legally allowed. Should be kept confidential, only the employer, payroll staff or authorised person (e.g., accountant) should be able to see the record

Salary Packaging Agreements

Must be kept for 7 years. Should be kept confidential, only the employer, payroll staff or authorised person (e.g., accountant) should be able to see the record. Must have a signed agreement detailing the arrangements.

1. e) Legislation, regulations and best practice guidelines change. This may result in future changes to the above being required. Describe a procedure or policy which could be implemented to ensure the company stays compliant.

The company should maintain a register of all current legislation, regulation and best practise guidelines, then implement a procedure where this information is updated every 3 to 6 months and any new information should be updated in the register and a notice with a brief explanation be sent out to the relevant staff . As part of this procedure the checker could also assess the impact of any updated / new legislation, regulations etc would have on current policies and procedures and begin amending and implementing and internal changes to adhere to these guidelines.

1. f) The existing payroll procedures do not cover the treatment of a Superannuation Standard Choice Form that is submitted without being completed, or the form not being submitted at all. How should the payroll department treat accumulated superannuation payable where no employee choice of fund information is available? Why?

If an employee does not submit a Superannuation Standard Choice Form, the payroll department should remit the employee's superannuation contributions to the default fund specified in the award or enterprise agreement that applies to the employee.

1. g) You are the payroll officer for Little Pear and the existing payroll system procedures do not properly cover the establishment, accrual and payment of superannuation. Your manager has come to you and asked that you write a memo to the Head of Human Resources establishing a new system to manage super information and payments.

Research using the textbook and the internet on payroll system procedures for assistance on how to establish this system. Use KeyPay as the software in your payroll procedures.

Your memo needs to include steps on how to:

• Obtain superannuation information from employees using super choice forms

• Update or add this superannuation information into KeyPay

• Accrue superannuation liabilities as part of running a pay run

• Run a report to determine superannuation liabilities

• Process payments for the superannuation guarantee using an electronic clearing house

• Ensure you are remitting superannuation on time (include due dates)

Take a screenshot of a Superannuation Contributions Report from KeyPay and add it into your memo. Explain the report including what needs to be paid and by when.

Also ensure that your memo is in line with employee confidentiality procedures and the Privacy Act when obtaining and accessing payroll information. Please add some detail on this to your memo.

LITTLE PEAR ADMINISTRATION --- MEMO

DATE: 21/2/2023

TO: The Board of Directors, Head of Human Resources, Department Managers

and Franchisees of Little Pear

FROM: Lisa Mathews - Payroll

SUBJECT: Payroll system procedues -Managing Superannuation Information and payments

To Whom It May Concern,

This memo is to communicate changes to the Payroll System Procedures.

Employees must be provided with a Superannuation Standard Choice Form, to ensure they are always completing the most recent version of this form we direct them to the ATO website using the following link: https://www.ato.gov.au/Forms/Superannuation-(super)- standard-choice-form/#Employees . Once completed we ask that they return their completed forms to the HR Manager, ideally in physical form however email is acceptable. The HR Manager should then check that all required fields are completed, save a copy of the form into the employees confidential personnel file, and enter the data into KeyPay using the following steps:

1. On the business dashboard locate the relevant employee and click on their name.
2. On the left of the screen is a list of options, under Pay Run Settings click ' Super Funds'.
3. 3.Click the green ' Add' button to enter the employees' super detail
4. Click 'Choose Super Fund'
5. Select whether the fund of Regulated or Self-Managed
6. Enter the fund name in the search field and click 'Search'
7. Confirm the USI matched with the information provided and select the fund
8. Enter the Member Number and the percentage to be paid into that fund which will usually be 100%
9. Click 'Save'

To enter or check the superannuation liabilities that will be included in the employees pay run, click on the Pay Rates option under Pay Run Settings once in the employees file on KeyPay, here you will see a list of pay items and their settings, under the Super Rate column you can override any defaults to enter the required rate, when this is done click the Save button at the bottom of the page.

To run a report on superannuation liabilities, select the Reports option on the dashboard and under the list of payroll reports select Super contributions. Enter the date range that you want to report on as well as any other relevant details (eg: if you want to report on an induvial employee or by contribution type) , then select 'Run report'.

To process payments log into the Small Business Clearing House via the following link:

https://www.ato.gov.au/Business/super-for-employers/paying-super-contributions/how-to-pay- super/small-business-superannuation-clearing-house/ and selecting 'Employees' and then 'Small Business Clearing House'. From here you must confirm that all employees are listed, and their fund details are correct, once this is done add a new lodgment period, enter the data from the Super contributions report (screenshot and more detail regarding data from report at end of memo).

Confirm the total liabilities from the report is the same on the Clearing House and lodge. You will be given BPAY details to make payment in the online banking system. Superannuation Contributions must be paid in full and on time to avoid Superannuation guarantee Charge, the due dates are as follows:

Quarter 1 (1 July - 30 September) payment due 28^th October

Quarter 2 (1 October - 31 December) payment due 28 th January

Quarter 3 (1 January - 31 March) payment due 28 th April

Quarter 4 (1 April - 30 June) payment due 28^th July

On the attached Super contributions report you will see an array of information (employee names and fund details have been redacted to comply with the Privacy Act and company policies). To lodge the superannuation, you will need to pull the total payable by contribution type for each employee, this includes Super Guarantee amounts which is the employer mandatory amount, and Salary Sacrifice amounts (not included on this report) that are employee additional amounts. You can also use this report to check that fund details are correct in the Clearing House, and as stated earlier that totals match on the report and in the Clearing House.

1. h) Some business structures are required to pay superannuation, whilst other business structures are not required to make superannuation payments, please put yes or no in the boxes below to describe whether super payments need to be made:

Business Structure	Yes	No
An employee of a company	x
A sole trader drawing wages from their business		x
A contractor that does not meet the ATO Employee Decision Test		x
A contractor that does meet the ATO Employee Decision Test	x
A contractor payment under a Labour Hire agreement		x

Question 9

Calculate and process the impact of salary packaging arrangements on an employees payments.

Donald Dolores wants to enter a Salary Packaging arrangement with his employer for the next FBT year, being 1 April 2019 through 31 March 2020.

Here is an extract of Donald's last pay slip:

Donald would like to package the following from 1 April 2019:

1. A) A new iPhone for his work and personal use. The cost is $1,499 excluding GST. (Assume GST is payable by the employer and can claim GST credits on this expense.)

1. B) Gym membership at fortnight cost of $55 including GST, i.e. 26 fortnights @ $55 pf = $1430 p.a. (Assume personal expense payment fringe benefit and also not otherwise deductible.)

1. C) Use of a company car for occasional personal use. The taxable value of this benefit for FBT purposes is $6,200 per annum.

1. D) Superannuation up to the concessional contribution cap. i.e. concessional contributions cap 2018/19 $25,000 (all ages) less SG $15,200 (= 9.5% of Donalds annual wage $160,000) = $9,800 p.a.

The completed salary packing agreement contains the following information:

Type of Benefit	Benefit Value	Taxable Value of FB (if applicable)	Gross up rate	Grossed Up value of FB (if applicable)	FBT 47%
A) Mobile phone	1,499	N/A
B) Gym membership	1,430	1,430	2.0802	2,974	1,397.78
C) Company car	6,200	6,200	2.0802	12,897	6,061.59
D) Superannuation contributions	9,800	N/A
Total	18,929	7,630		15,871	7,459.37

Donald Dolores has also submitted a Superannuation Standard Choice Form, requesting that his super fund be changed to:

ING Living Super

USI 13355603448001

Member Number 00058693

Required:

To perform this exercise, use the Learn Now Practice Payroll System (KeyPay online payroll software) with the specific Your Businesses payroll file already set-up for you.

Please be certain to again use the business file named FNSPAY501&502 2 Assessment EDU####### (where EDU####### will show your unique number). Do not use any other file. This file was used earlier in this assignment.

You can access the payroll software here https://learnnow.yourpayroll.com.au/

1. a) Log into the Little Pear Practice Payroll System using the business file named FNSPAY501&502 2 Assessment EDU#######. This file was used earlier in this assignment; use it again for this exercise.

1. b) Record the details of Donald's salary packaging agreement in the Practice Payroll System.

1. c) Record the change of superannuation fund in the payroll system.

1. d) Process a pay run (for Donald only) for the week ending 7 April 2019, to be paid 8 April 2019.

Take a screenshot of Donald's pay slip and insert in the box below.

Note: The required payroll file has already been created for you, however you will need to create some Pay and Deduction Categories, perform a pay run and print certain documents. This may require you to learn how to use the KeyPay software by referring to online help provided within the KeyPay software. Many students find KeyPay user friendly and reasonably intuitive.

Question 10

Video role play: Co-contribution enquiry

Scenario

Gary, a staff member at Hawthorn Pty Ltd, has asked to meet with you; he wants an explanation of co-contribution. You meet with Gary to provide information and answer his questions. Also refer to your response for question 6i) regarding eligibility for the super co-contribution.

Roles

• You: the Payroll Officer

• Gary: another staff member at Hawthorn Pty Ltd

Resources required for this assessment

• Activity 10 Role play script: Co-contribution enquiry (Appendix A of this assignment);

• One other person to read/play the part/s of Gary;

• Device to record a video of your meeting.

Instructions

You will need at least one other person for this task. Give them a copy of the script titled Activity 10 Role play script: Co-contribution enquiry.

Record your meeting with Gary. Follow the video recording instructions that are available on the LMS. Upload the meeting video when you upload the rest of the documents for this Assessment workbook.

If you cant complete this video assessment activity, please contact your trainer ASAP.

This task is designed to help assess your ability to:

• Greet staff appropriately and professionally

• Explain how super co-contribution works and outline the eight elements of eligibility

• Provide co-contribution related information including:
  
  
  • Income thresholds
  
  
  • Eligible income tests
  
  
  • Relate the information to the given scenario
  
  
  

• Engage in dialogue (question and answer exchange) using clear and professional language

• Provide information using appropriate terminology and non-verbal features (tone, style, facial expression, body language)

• Use listening and questioning techniques to engage in dialogue and respond to questions appropriately and clarify information.

• Ask appropriate questions to elicit relevant information.

Student Pre-Submission Checklist

When you upload this Assessment workbook, make sure you also submit:

• Role play video (Activity 10: Co-contribution enquiry)

• Activity 5d): Include screen shot of Peter Hanson pay slip & PAYG Payment

• Activity 8g): Include screen shot of super contributions in memo

• Activity 9: Include screen shot of Donald Dolores pay slip

Video Role Play General Instructions:

• Students must conduct the role play with at least 1 other person;

• Using just 1 other person to play multiple roles is completely OK. Alternatively, you can use as many other people as there are roles;

• The other person(s) can play multiple roles except for the role required to be played by the student;

• There is no requirement for the other person(s) to be visible in the video, so if the other person(s) would prefer not to be visible, thats OK;

• The student must be visible throughout the video;

• All people must be audible throughout the recording;

• Using a camera phone is often a quick and easy way to record the video.

Role Play Setting

When deciding on where to conduct the role play we suggest:

• Find a quiet, private space where you can effectively record the video. This could be a spare room at home, an office at your workplace, or even a study room at your local library;

• Be appropriately dressed.

During the Role Play:

• Use appropriate body language and gestures, including eye contact;

• Speak professionally, and at an appropriate pace (between 120 wpm and 150 wpm);

• Use your natural conversational skills, do not simply read from your notes/script;

• Use plain English;

• Listen without interrupting;

• Respond appropriately to what is said.

	Tip: A video role play is required to demonstrate your ability to communicate verbally and interact with others in a simulated workplace environment. You need to use your natural conversational skills during the role play: you may refer to your notes and resources but if you simply read the entire interaction, you may be asked to redo your role play in order to meet the requirements of this unit.

Want to practice your speaking speed?

There are several free metronome apps available for Apple and Android which can help keep time as you practice your presentation. Here are 2 smartphone apps that can help:

Metronome Beats: Metronome Beats has easy-to-use controls for increasing and decreasing the tempo. The visual beat indicators help you to keep track and it is very easy to mute the metronome while visually monitoring your tempo.

Pro Metronome: Pro Metronome is a fantastic app for public speakers who are working on their pacing. It offers a variety of ways to keep your tempo: screen colour changes, vibrations, or sounds.

Appendix A: Activity 10 Role Play Script Co-contribution enquiry

Scenario

Gary, a staff member at Hawthorn Pty Ltd, has asked to meet with you; he wants an explanation of the government super co-contribution. You meet with Gary to provide information and answer his questions. Also refer to your response for question 6i) regarding eligibility for the super co-contribution.

Roles

• You: the Payroll Officer

• Gary: another staff member at Hawthorn Pty Ltd

Instructions

If you only have one other person, they play/read all the roles except yours.

The parts are indicated with names in brackets, like this: [YOU] [FELIX].

When something is written in bold, its just a guide not a line you have to read word-for-word.

Theres often no script for what you say; just guidelines. Thats part of the challenge! Dont read these lines out. Instead, answer in a way that fulfils the guidelines.

For example, if the guideline for the you were:

[YOU]: Name and describe some fruit. Say something good and something bad about the fruit.

you might say Apples. Theyre red, juicy, and crunchy. Theyre high in fibre, but you cant eat the core.

• Normal speech is written as follows. Read these parts out.
  [MARY]: Lets get this meeting started.

• Instructions for actions or body language are written in italics as follows. Dont read these parts out.
  [FRED]: Look angry and raise your hand.

Activity 10 Role Play Script - Co-contribution enquiry

[YOU]: Greet Gary.

[GARY]: Thanks for meeting with me. I just want to make sure I get the most Im entitled to, you know?

Acknowledge Garys comment. Explain the basics of the co-contribution.

[GARY]: Oh, OK, so am I eligible?

[YOU]: List the eight elements of eligibility. Ask Gary (tactfully) what his income is.

[GARY]: Im on $35,000 this year. Since I went part-time and all, and this is my only job. Does that make a difference?

[YOU]: Answer Garys question about being a part-time employee with no other income.

Explain the income thresholds, eligible income test, any minimum personal contributions, and what Garys income means for his eligibility. Ask Gary his age and citizenship status.

[GARY]: 60 this year, born and grew up in country Victoria. Well, from what you have said, it sounds like Im in so far!

I reckon I can do that. Ill have to geton to my super fund about that. Righto, anything else?

[YOU]:

Tell Gary he has got all the information he needs. Wrap-up by saying that Gary should confirm his situation with his professional financial adviser who would be fully familiar with all Garys personal financial affairs.

[GARY]: Will do! Thanks for your help today!