Handling PAYG when there is an additional pay in a year

Legacy KB ID: 3768

Question

This year our company will make an additional pay.  What can I do to ensure that withhold the correct amounts of PAYG from our employees throughout the year?

Answer

It is possible for a year to have an additional pay because of the timing of pay days – that is, there may be 53 weekly pays or 27 fortnightly pays.  The ATO withholding tax tables are calculated on a normal number of pays in a year, so the extra pay can lead to employees not paying the full amount of PAYG throughout the year so that they have a tax liability at the end of the financial year. 

 

Solution

Users should refer to the ATO’s website on the issue:

https://www.ato.gov.au/businesses/content.asp?doc=/content/45335.htm

 

To increase the amount of PAYG withheld:

1.    Open the Employee record and click on the Taxation tab;

2.    In the Extra Tax (+) Or Rebate (-) box enter the amount suggested by the ATO and click OK.

Enter a diary note to remove the extra tax after the last pay of the financial year.  You can enter the note in Reminders under Lists on the top menu line.

 

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