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Taxing back pay for 7 months on salaried person with student loan in NZ Payroll

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Enza-Suem
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Enza-Suem

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Taxing back pay for 7 months on salaried person with student loan in NZ Payroll

I understand from previous posts that the underpayment is calculated and entered as a lump sum under the back pay code, then the tax rate selected for the extra pay in the Tax Override.  Do I have to enter anywhere that it is to be taxed over 7 pay periods?  Also, is it advisable to make the back pay payment separately from the normal monthly pay?

 

Thanks,

 

Sue

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Ultimate Partner jenniek
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jenniek
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Re: Taxing back pay for 7 months on salaried person with student loan in NZ Payroll

Hi there @Enza-Suem

Backpay is taxed as a lump sum using the secondary tax codes - because it is in addition to the earnings already earned, so needs to be at the higher tax rate based on the employees gross earnings over a year.

 

Regards,
Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ
Email: jennie@jkbusiness.co.nz
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