Australian Payroll System

Australian payroll processes in one Business Central workflow

Payroll touches employee pay, tax withholding, allowances, deductions, superannuation, payment journals and financial reporting. The Australian Payroll System brings key setup and processing tasks into Microsoft Dynamics 365 Business Central.

Administrators can configure pay items, prepare payroll runs for a defined pay cycle, review salary calculations and post resulting entries to the General Ledger. The salary tax calculator and tax-coefficient setup provide additional tools for reviewing salary packages and maintaining calculation parameters.

Pay Items Setup

This area centralises payroll configuration and financial mapping. It includes default accounts, bank accounts, Medicare settings, leave accruals, earnings, allowances, deductions, reimbursements, company contributions and superannuation.

Default accounts and bank accounts

Map salary expenses, salary liabilities, superannuation expenses and PAYG withholding to the appropriate General Ledger accounts. Payment settings can identify the default bank account and relevant journal numbering, template and batch details.

Leave and earnings setup

Leave settings can define leave type, entitlement hours, accrual period, maximum balance, leave loading and active status. Earning items describe pay components and can include type, subtype, description, pay-rate basis, linked G/L account and tax treatment.

Allowances and deductions

Allowances are configured separately from other earnings. Administrators can define a subtype, description, account mapping, calculation basis and default rate. Deduction setup can include a payee, whether the deduction applies to gross or net salary, a default rate, a limit and the limit frequency.

Reimbursements, contributions and superannuation

Reimbursement items can support employee expenses such as travel, meals or training. Company contribution and superannuation settings can define expense and liability accounts, payees, calculation basis, rates, thresholds and limits. Review statutory rates or thresholds against current requirements before using them for a live pay cycle.

Pay Runs: from salary setup to payment

A pay run covers a defined pay period and brings together employee earnings, allowances, deductions, tax, superannuation and net pay. The workflow separates calculation, salary posting and payment posting so administrators can review each stage.

How to create and post a pay run

System features and troubleshooting

• Open-run protection: helps prevent an employee being added to multiple open pay runs.
• Draft-stage editing: salary records are described as editable only while the pay run remains in Draft.
• Tax-scale defaults: the guide describes a default scale that can adjust according to employee tax setup.
• General Ledger integration: salary posting connects payroll calculations with accounting entries.
• Bulk actions: payment posting and payslip downloads may be available for a full run.

Employee cannot be added? Check that their default salary cycle matches the pay-run schedule and that they are not in another active, unposted run. Modify is unavailable? Check whether the record has moved beyond Draft. Need to change the payment date? The archived guide indicates this can be changed before the run is marked Paid; verify the rule in your installed extension.

Salary Detail: review the pay calculation

Salary Detail provides a breakdown of an employee's pay within a specific run. It can show the pay-run name and cycle, payment date, status, employee details, earnings, allowances, gross earnings, taxable income, tax, offsets, deductions, superannuation and net pay.

Calculation definitions depend on the extension's configuration and applicable rules. Treat this as a guide to the fields, not a substitute for payroll validation.

Salary Tax Calculator

The salary tax calculator is described as a salary-modelling and validation tool within Business Central. It can help payroll administrators compare salary cycles, assess how a package treats superannuation and review estimated income tax, Medicare levy and net pay.

How the calculator works

ATO Tax Coefficients and Medicare Levy Setup

The product guide describes a tax-coefficient area that stores calculation parameters separately from the calculator interface. This can make configuration easier to review and update, but values must be checked and maintained by authorised personnel.

Tax coefficient fields

• Floor and ceiling amounts: define the income range for a coefficient record.
• Variable A and Variable B: inputs used by the configured withholding formula.
• Tax scale: identifies the applicable scale or category.
• Tax rate: stores the configured rate for the relevant range.
• Foreign resident flag: identifies records intended for foreign-resident treatment, where applicable.
• Status: indicates whether a parameter is active.

Medicare levy parameters

Medicare levy settings can associate a scale with a parameter and amount, alongside an active/inactive status. Retaining historical parameters may help administrators understand earlier configurations, while current settings should be checked against the relevant tax year and employee circumstances.

Frequently Asked Questions