Purchased Leave Summary
What It Is: Permanent full-time and part-time staff can apply to buy extra leave, as outlined in company policy.
How It Works:
Staff agree to a reduced annual gross salary in exchange for additional leave.
The salary reduction is spread evenly across the year.
Financial Implications:
Other entitlements (e.g. superannuation, paid leave) may be affected due to the lower salary.
Staff are advised to seek financial advice before committing.
STP 2 Reporting:
Gross income is reported before any salary sacrifice.
Sacrificed amounts are reported separately:
Sacrifice – S for superannuation.
Sacrifice – O for other benefits.
Taxation: Tax is applied to income after sacrifice.
Services Australia: Uses pre-sacrifice income for its assessments.
Typical Arrangement:
Employees choose extra leave (e.g. 1–2 weeks).
Their salary is adjusted to reflect fewer working weeks but paid evenly across the year.
Follow the steps below to set up and process Purchased Leave in Attaché
Create a new income category
Create a new income category called Purchased Leave from Setups, Payroll, Payroll Options, Other Options.
📌Note: If you have already populated your user defined Income Categories, then you will be able to use the new Income Category Purchase Leave available by upgrading to version 22.2 or above.
Set up a new income code
Set up a new income code called Purchased Leave from Setups, Payroll, Income Types, Maintain.
Set up a Purchased Leave deduction
Set up a Purchased Leave deduction from Setups, Payroll, Deductions, Maintain.
Deductions can be setup in two methods:
Option 1
For values that aren’t sent to Total Salary Sacrifice, set the deduction up as:
Before Tax
Tax Certificate Code = Purchase Leave
Click Include in OTE if super is to be paid. Please check your company policy regarding super as some may state that Super will still be paid at the pre-purchased annual leave salary rate, in which case you would NOT tick this box.
GL Postings: If using GL Postings, the liability account should be your Gross Wages account code to reduce the Gross.
Option 2
Values that are assigned to Total Salary Sacrifice, set the deduction up as:
Before Tax
Tax Certificate Code = Include in Tax Certificate Code
Click Include in OTE if super is to be paid. Please check your company policy regarding super as some may state that Super will still be paid at the pre-purchased annual leave salary rate, in which case you would NOT tick this box.
GL Postings: If using GL Postings, the liability account should be your Gross Wages account code to reduce the Gross.
Set up a leave table - Purchased Leave
Set up a leave table Purchased Leave from Setups, Payroll, Leave Tables, Maintain
📌Note: This leave table DOES NOT accrue leave, it is there so you can manually add the Purchased Leave entitlement to the employee Masterfile
Update the Standard Pay with Purchase Leave
Change the standard pay from Payroll, Masterfiles, Standard Pays, Maintain to include the deduction for the Purchased Leave.
From Payroll, Masterfiles, Employee Details, Maintain, go to the Leave tab for the affected employee(s) and add Purchased Leave and the entitlement.
Creating a timesheet for Purchased Leave
Enter the following when paying out the purchased leave from Payroll, Transactions, Timesheets, Create or Modify.
STP2 reporting - How it will look
How it should look in Single Touch Payroll Reporting.
Deduction Option 1 – New Purchase Leave Tax Certificate Category
Gross $48,077 ($50,000 - $1,923)
Total Salary Sacrifice nil
Taxable Gross $48,077
Taxable leave $ 1,923
Taxable $50,000
Deduction Option 2 – Include on Tax Certificate Total
If the usual salary sacrifice approach of reporting is followed, then this would be:
Gross $50,000
Total Salary Sacrifice $ 1,923 (type O)
Leave paid $ 1,923
Taxable $48,077