MAN09 Payroll

Muli Payroll Solutions - Concepts & Terms Used

The fundamental principle to implement Muli Payroll is that the Users understand their interpretation of the various awards and conditions to ensure that the payroll set-up reflects the company's interpretation.

Over time Muli has encountered considerable variation in interpretation and our object is to enable you to manage your own interpretation.

Our comments are provided for guidance but are not guaranteed to be correct to your situation.

Muli Payroll Solutions provide a single process to achieve:

1. Payment to Employees:
   
   • Cash
   • Cheque
   • Direct Deposit
2. Apportion the costs of (ABN) contractors where employed over a range of projects on an ongoing basis.
3. Development of a fully loaded cost (burdened rate) to charge the projects for services provided, including provisioning for paying:-
   
   • Holidays
   • Superannuation
   • Employee cost on company, eg:
     
     1. Car lease
     2. Phone
     3. Bonus
4. Charge projects via labour orders, for:-
   
   • Employee services provided (may be used to distribute consultant/ABN payments)
   • Manage up to six (6) Leave types:-
   • Calculate employee entitlements
   • Keep history of Leave taken
   • Employee balances
   • Company obligations
5. Pay Superannuation obligations (including Industry Fund Returns):-
   
   • Salary Sacrifice
   • Company Payment
   • Employee Co-payment
6. Management of Employee Timesheets
   To allow Users or their supervisors to directly enter worked time. This project timesheet forms the base documentation for payroll processing.
7. Calculate obligations for employees.
8. Fully balanced payroll journals debiting the project for work done, crediting relevant overhead accounts for provision/payment of pay obligations.
9. Muli Payroll develops a fully loaded cost for charge to the project for work being done. This includes making provision for future all the costs associated with employing the individual.
   These may include:-
   • Direct payment to individual
   • Individuals' PAYG Tax
   • Provisions for employee benefits & costs. (Provisions are Liabilities in the balance sheet)
   • Other Payroll charges, such as Workers' Compensation, Payroll Tax, and individual on-cost items like Provision for Annual Leave, Superannuation, Car Lease, etc. are added to an Employee's salary to come up with a gross cost. This cost is distributed to the projects according to the time-sheet. 
     All charges create a balanced journal with debit costs to project when work is done and credited to relevant control accounts in Payroll owning General Ledger. Where the project is in a different company, then relevant intercompany loan account journals are completed.
   • Pay Sequence
     All processes in Payroll are controlled by pay sequences which are in the range (A-Z) (001-999). See Muli code 521 for Overview or [9.11.7] Pay Sequence Report for a detailed list.
   • Labour Orders (L-orders)
     All Payroll transactions are posted to (L) Labour Orders. (No other transactions may be posted to L-orders).
     Payroll is processed as a balanced set of journals that debit and credit various labour orders with all payments to employee's superannuation, etc occurring via General Ledger clearing accounts.
     Note: The Organisation for all labour orders is $PAYX, where 'X' is equal to Payroll providing company. Ie, if Company 'C' is providing payroll services, then $PAYC. 
     An individual could be providing services to a number of group companies which could have labour orders from multiple providing companies.
   • Calculation of employee tax obligations.
   • End of Year procedures to:
     1. Employee PAYG Payment Summary
     2. Electronic Returns of Payroll information to Tax Office
     3. Balancing of BAS for year
10. Tax Calculations
    

    On setup Employee Tax Maintenance [9.8.2] 09159m includes the selection of the relevant tax scale to be applied to the employee earnings.  Stage 2 will have a secondary step which will allow the company to apply "year to date tax averaging" to tax payment.

    This concept is allowed in some tax jurisdictions, eg. United Kingdom, but our discussion with the Australian Tax Office indicates the concept is not allowed for in the current legislation. (Companies can make their own decision to use same).  We will continue to seek a positive ruling from the ATO.

    With each payment the tax calculation is required to be completed using the relevant table as per the Tax Pay Sequence selected for the employee, and the value of tax applicable is shown against that pay sequence in the timesheet.

    Additionally Muli can incorporate HELP and other requirements which may arise with child support.

    Traditionally, if the pay person believed the tax extracted at the top marginal rate for say a backpay or bonus was not applicable, they would make a manual tax adjustment with tax averaging turned on - pay allowance "S190 tax YTD averaging AUS".

    Do secondary calculation based on :-

    • total taxable earning year to date
    • Tax payable on above earnings for year to date duration (from start date) and then make an adjustment to hand back any over provision.
    Users will not be able to achieve the above feature if more than one tax scale is preset in a timesheet.

Note: No foreign employment and survey at this time. If you need the provision please contact Muli.