4. Review Deduction Categories

For any Union or Professional Association Fees or Workplace Giving deductions, be sure to audit the Classification field so the itemised deduction amounts appear separately in the Income Statement. As part of STP Phase 2, they have introduced several new classifications to categorise the deduction types, so it is important to make sure your deduction categories are correct. There have also been two Salary Sacrifice classifications introduced as part of STP Phase 2:

• Salary sacrifice (superannuation):
  • It refers to an effective salary sacrifice arrangement:
    • Entered before they performed the work.
    • Where you paid contributions to a complying superannuation fund.
    • Whereby the sacrificed salary is permanently foregone.
• Salary sacrifice (other employee benefits):
  • It refers to an effective salary sacrifice arrangement:
    • Entered before they performed the work.
    • For benefits other than for superannuation.
    • Where the sacrificed salary is permanently foregone.
  • Examples include:
    • Novated lease.
    • Gym membership.
    • Workplace giving donations.
    • Car.
    • Property (goods, land, buildings, shares and bonds).
    • Expense payments (loans, school fees, childcare costs and home phone costs) and.
    • Work-related items, such as portable electronic devices and equipment.

If they have made salary sacrifice arrangements where you pay the contributions to a super fund, we strongly recommend using the platform default deduction category for Salary Sacrifice Super. Alternatively, if the salary sacrifice arrangements are for benefits aside from superannuation, please make sure to use the Salary sacrifice (other employee benefits) classification.

To ensure the correct classifications have been made you will first need to navigate to the deductions category within Payroll Settings:

You will then need to ensure that the correct classification has been assigned (note that system generated deduction categories will have a preassigned locked classification):