6. Finance, Accounting, GST, and Payroll Information

6. Finance, Accounting, GST, and Payroll Information

Standard Disclaimer: The information provided in this document is for informational purposes only and reflects the opinions of the author only. It is not financial, tax, or legal advice. Please consult with your financial and accounting professionals for advice around your specific situation.

Finance Information: 

Many businesses set up internal methods to actively monitor and account for the Workride benefit with staff. This can sometimes be facilitated by your finance/payroll system, however, in some cases may require an internal costing unit or a separate spreadsheet to keep track of. Our team has helped hundreds of employers implement Workride, so rest assured there is a pragmatic solution for your specific situation. 

GST Treatment:

Inland Revenue has provided guidance around how GST is required to be treated when using Workride. The following has been extracted from the Inland Revenue's binding ruling, Page 5.  (Link here to IRD binding ruling.)

How the Taxation Laws apply to the Arrangement:
"(c) The Employer can claim the GST charged on the supply of the Services by WorkRide (being the facilitation of the Arrangement) as input tax (as defined under s 3A(1)(a) of the GSTA) under s 20(3) and 20(3C) of the GSTA to the extent to which the Services are used for making taxable supplies.

(d) The sacrifice of salary under a Salary Sacrifice Agreement is consideration for a taxable supply by the Employer to the Employee under s 8 of the GSTA of procuring the provision of the Equipment to the Employee. The value of the supply for the purposes of s 10(2) of the GSTA is the amount of the salary sacrificed."

Please refer to Inland Revenue's Binding Ruling page 5 - (Link here to IRD binding ruling.)
Info
In our opinion (not advice), this dictates that GST could be claimed for the OPEX of Workride by the employer, but then is required to be credited due to the supply between the employer to employee. For simplicity this can be two line items, claiming GST for OPEX, and then crediting for supply to the employee, which ultimately creates a GST-neutral activity. We always stress that is opinion, and to please consult with your financial and accounting professionals for advice around your specific situation.

Standard Accounting Approach - Workride Max

Purpose

This guide provides a practical framework for bookkeepers and payroll teams to administer Workride supplier invoices and employee salary sacrifice in an accounting system (for example Xero or MYOB). It focuses on simple coding, optional amortisation, and clean reconciliation.

Summary Points

  1. Workride invoices are typically coded to remuneration or staff benefits (expense).

  2. Some employers use a prepaid staff benefits account and amortise over 12 months (optional).

  3. Salary sacrifice is handled in payroll as a reduction to gross pay; some employers also post a journal to reduce prepaid or clear per employee balances (optional).

Key Principles

Workride supplier invoice (what the employer pays out)

  • Code the Workride invoice using one of the following approaches:

    • Simple approach: code to Remuneration / Staff benefits (expense).

    • Matching approach: code to Prepaid staff benefits (asset) and amortise to Remuneration over 12 months.

Salary sacrifice via payroll (how the employer is repaid)

  • Salary sacrifice is processed in payroll as a reduction to the employee’s gross pay.

  • This means the payroll wage cost is lower than it would have been; this is how the cost is recovered from the employee over time.

  • Optional tracking: post a monthly journal to a Workride clearing account (or reduce prepaid) so you can reconcile repayments against the original cost.


Common Management Approaches

Option A: Small employer, minimal journals (most common)

  • Code Workride invoices straight to Remuneration / Staff benefits.

  • Run salary sacrifice through payroll as a gross pay reduction (so PAYE is calculated on the reduced gross).

  • Keep an external employee schedule (spreadsheet) listing: start date, monthly sacrifice amount, months remaining, total to collect.

  • Reconcile occasionally: total salary sacrifice collected vs total Workride invoices paid.

This option keeps the accounting platform clean and reduces monthly administration.

Option B: Larger employer, cleaner matching to the 12-month benefit

  • Code the Workride invoice to Prepaid staff benefits (asset).

  • Each month, journal $1/12$ into Remuneration / Staff benefits (amortisation).

  • Each month, journal the payroll sacrifice to either reduce the prepaid balance or post to a Workride clearing account that you reconcile against prepaid.

This option provides stronger month-to-month matching, but it adds journalling effort.


Most employers either expense the Workride invoice to remuneration and keep a separate employee schedule outside the accounting system, or they put it to a prepaid staff benefits account and amortise it over 12 months. The salary sacrifice is handled in payroll as a reduction to gross wages, and if they want tighter tracking they can also post it to a Workride clearing or prepaid account for reconciliation.


Disclaimer: This guide is provided for general information only and is intended as a practical administrative framework. It does not constitute tax, legal, or accounting advice. Employers should confirm the appropriate treatment for their specific circumstances (including GST and payroll settings) with their accountant, tax adviser, or payroll provider.


Payroll Information:
The Workride Benefit Scheme operates using a 'salary sacrifice' system. When an employee opts to forgo a part of their salary for a Workride-approved benefit, this deduction is made from their pre-tax income. As a result, the employee ends up paying less in PAYE, Kiwisaver, and ACC levy, which in turn leads to a reduced Kiwisaver and ACC levy bill for you, the employer.



Any payroll system has the ability to implement a salary sacrifice, as at the most basic level it is the gross reduction of an employees salary. Eg. Instead of being paid a gross salary of $80,000 a year , it is adjusted to meet the agreed salary sacrifice. Which in the example of a $5200 sacrifice is now $74,800. 

During the Workride process, when the employee picks up their ride benefit in-store Workride will automatically send through the Employees Salary Sacrifice guidance to payroll, this information is what is used to then implement into your payroll system. Feedback to date is this is a 1-2 minute task. 

Info

Only opinion, however, when a salary sacrifice arrangement is part of a repackaged employment agreement, resulting in a reduced gross taxable salary, it can impact how annual leave pay is calculated under the Holidays Act 2003 in New Zealand. 

Key Considerations

  1. Ordinary Weekly Pay and Average Weekly Earnings:

    • According to the Holidays Act, annual leave should be calculated at the higher of:
      • Ordinary Weekly Pay: This is the amount an employee would earn in a typical week, as defined in Section 8. If the salary sacrifice changes the employee’s base salary in the employment agreement, their ordinary weekly pay calculation might be based on the reduced amount.
      • Average Weekly Earnings: Defined in Section 21(2), this considers the employee's total gross earnings over the previous 12 months. Salary sacrifice arrangements typically reduce gross taxable earnings, which means that average weekly earnings would also reflect the reduced post-sacrifice salary.

  2. Impact of Reduced Taxable Salary on Leave Calculations:

    • Since salary sacrifice arrangements lower an employee's gross taxable salary, both ordinary weekly pay and average weekly earnings may end up being calculated based on the reduced (post-sacrifice) salary amount. This means the annual leave pay could be lower than if it were calculated based on the original pre-sacrifice salary.

Idea
Key Takeaway: 
A conservative position would be to keep annual leave rates as the pre-sacrifice gross salary value. 


Here are a few examples of payroll blogs/info on Workride:





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