CrewCard

Understanding Reimbursements in Payroll: What You Need to Know

When it comes to payroll, there is more to it than just wages and superannuation. Reimbursements significantly ensure your employees are in the right pocket for expenses incurred. Although reimbursements are not reportable to the Australian Taxation Office (ATO), they must be handled correctly and appear on the employee's payslip.

Reimbursement

What Are Reimbursements?

Reimbursements refer to payments made to employees to cover personal costs incurred while performing their duties. These can include travel expenses, work-related purchases, or other costs necessary for their job. Unlike regular earnings, these amounts aren’t taxable income and don’t attract PAYG withholding.

Why Are Reimbursements Important?

It’s crucial to distinguish between taxable wages and non-taxable reimbursements in your payroll system. Correctly categorising these ensures compliance with ATO regulations and openness for employers and employees. It also helps maintain accurate financial records during audits or financial reporting.

How to Add Reimbursements in Payroll?

Adding Reimbursements via Jobsheet

On the job sheet page of CrewCard/ Personnel Manager, you’ll typically find an option to “Add Extra”. Here, you can enter the reimbursement details, such as the nature of the expense and the amount. Once saved, this will automatically reflect in the employee’s payroll.

Adding Reimbursements on the Payroll Page

Alternatively, you can add reimbursements directly on the Payroll List page. Simply use the “Add Payment” button, fill in the necessary details, and click “Add”. This method is straightforward and ensures that the reimbursement is included in the employee’s net pay.

Adding Reimbursements via Direct Payment

For those who prefer managing reimbursements separately, the Direct Payment page offers another option. You can enter the details and save them by selecting “Add Payment” from the menu. These reimbursements will be visible in the Direct Payments section, providing a clear record of all non-taxable employee payments.

While reimbursements are not reportable to the ATO, they must still be listed on payslips and included in the net pay calculation to ensure that employees are fully reimbursed for any out-of-pocket expenses and that there is no confusion about their take-home pay.

Reimbursements are essential to managing payroll, especially in industries where employees frequently incur work-related expenses. By ensuring these are correctly entered and reflected in your payroll system, you can maintain compliance and keep your employees

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