Entering back payments, commissions, bonuses and similar payments

When paying employees back payments, commissions, bonuses and similar payments, the tax needs to be calculated based on the method used. The ATO has provided several methods to calculate this tax: Method A, and Method B(i) and Method B(ii) and Return to Work.

Reckon Payroll allows you to select the relevant calculation method, to ensure the values are reported correctly to the ATO and displays a Lump Sum PAYG section for you to manually enter in the tax value.

Paying Earning items for Back Payments, Commissions, Bonuses and similar payments

To pay Back Payments, Commissions, Bonuses and similar payments the Pay item needs to be included in a Pay run. This can be done by adding the item to an employee's pay details in a pay run, or having it as a part of the employee's pay setup.

Reckon Payroll does not calculate the tax withholding amount when a Pay item has Tax applicable set to Additional payment method A, Additional payment method B(i), Additional payment method B(ii) or Return to Work. You will be required to enter the additional tax withheld for these Pay items.

Enter the tax withheld for Earning items for Back Payments, Commissions, Bonuses and similar payments

When a Pay item which has Tax applicable set to Additional payment method A, Additional payment method B(i), Additional payment method B(ii) or Return to Work and is part of an employee's pay run, the tax withheld field is displayed for you to enter the correct tax value.

For information on how to calculate the tax to be withheld see ATO website Schedule 5 – Tax table for back payments, commissions, bonuses and similar payments

If an employee has multiple Pay items with Tax applicable set to Additional payment method A, Additional payment method B(i), Additional payment method B(ii) or Return to Work they will be grouped together in a single Lump sums Tax item.

  1. To view the Lump sum tax values, select Lump sums tax item in the PAYG Tax section
  2. To edit the values, select the relevant pay item from within the Earnings & leave section and override the Tax withheld value

For information on how to calculate the tax to be withheld see ATO website Schedule 5 – Tax table for back payments, commissions, bonuses and similar payments

If you are using a pay item that has the calculation method of Additional payment method B(ii), the Financial year is a required field and can be selected from the drop down list.

Need help on creating pay items to be used for back payments, commissions, bonuses and similar payments ? Select Configuring Pay items for Back Payments, Commissions, Bonuses and similar payments.


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/payrollapp

Or Log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

Paying a Reimbursement

Processing a pay run in Reckon Payroll - Web

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