Leave loading is an amount paid in addition to leave payment. In Australia, annual leave may attract 17.5% in loading (the amount in addition to leave payment when you take it). This means if you get annual leave of $100, you’ll also get an additional $17.5 on top, so in total $17.5.
Xero shows leave loading not as a separate line, but calculates it as an increase in the rate of annual leave paid. For example, in the below image, leave loading will be show as part of annual leave but note that the 17.5% is included in the increased rate ($35 instead of the normal rate of $30).
Including annual leave loading in Xero is easy. Here are 2 steps you can take to do it:
Add/Edit your leave to include a loading rate
Go to payroll settings > Pay Items > Leave and select your leave. We’ll choose Annual Leave. Edit the line which says leave loading to the % of loading that you’ll add. If it’s 17.5% just write 17.5 (don’t write 0.175). Then click “Save”.
Tick the box “Eligible to Receive Leave Loading” from the Tax Declaration tab for each employee that is entitled to leave loading
Go to Payroll > Employees. Select your employee and go to the Tax Declaration tab. In that tab, click on the box that says “Eligible to Receive Leave Loading”. This should then handle the leave loading for you.
That’s all you have to do to enable annual leave loading or any kind of leave loading in Xero. When you do your pay run and send out payslips, the amount in annual leave that is paid for the week will also include annual leave loading (not as a separate line).
If you want to know how to do your payroll in Xero, here’s a simple guide that I’ve written. Hope you enjoy!
If you have any comments, just let me know below.
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