Payroll cycle

Question

A company will change ownership on 31. December and the agreement is that all income and expenses up to that date are covered by the original owners and any income and expenses in 2025 accrue to the new owners.
The Company keeps trading and the employee arrangements remain unchanged.

Currently the paycycle is fortnightly and payday will fall on 22. December and 6 January.

What is the best option to deal with payroll? I see

Option A: do one payroll on 31. December and a second one on 6 January and then resume fortnightly. This will make allocation of expenses easy but I am not sure how this affects taxation of staff since each payroll is different from the standard fortnight set up in MYOB. In addition Super will have to be paid and calculated too for the 4th quarter 2024.

Option B: Do normal paycycles and adjust between parties on settlement though this may be more difficult to sort out the details

Does anyone have some advice for me?

doreen_p · Answer

Hi there TomD,
&nbsp;
You can proceed with option A. There'll be no issues with super since it is based on wages. However, when it comes to tax purposes, it's best to speak to your accountant to make sure you're guided correctly through the process.
&nbsp;
Best regards,
Doreen

tomd · Answer

Hi Doreen,&nbsp; I played with this earlier today to see how MYOB would handle this but this caused the tax being calculated incorrectly.&nbsp; I made three pretend pays for&nbsp;normal payrunsplit payrun A for 7 days andsplit payrun B for 3 daysFor this to work, the tax withheld for the combined split payruns should be the same as for the usual payrun but this is not the case. I suppose this is due to the fact that forthnightly pays have a certain tax rate/ratio applied and if you change this to 7 days / 3 days and pay in two installments, things are not running as expected. Total tax withheld is short.

earl_hd · Answer

Hi TomD,For issues related to tax calculations, it is advisable to consult with an accountant. They can provide detailed guidance and ensure that the tax calculations are accurate and compliant with the relevant tax regulations.&nbsp;Regards,Earl

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