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Mantova's avatar
Mantova
Experienced Cover User
12 days ago

Bonus and Commission payments

Hi Team

We pay $ 30 per week to each employee if they work a full 38 hours per week as an incentive to come to work. We named the category Production Allowance and it is shown separately but included in Gross payment and taxed normally. Today when I processed the payroll the Pay Period menu showed Bonus/Commission first and a separate payslip allocated. I'm a little confused as this is an every week bonus, should it be included at normal PAYG tax table or taxed separately at 49% the would make $ 14.70 taxed on $ 30 which I don't think is correct but can't find a definition on ATO.

 

Please help thank you

Robyn 

Mantova Marketing

email robynt@mantova.com.au

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  • Shella_A's avatar
    Shella_A
    MYOB Moderator
    12 days ago

    Hi Mantova, 

     

    I appreciate your post. When you pay a bonus or commission, AccountRight considers the total gross pay as the regular wage of the employee and taxes it as such. This means you'll have to work out and adjust the PAYG withholding on the pay manually. For the current rates of PAYG withholding on bonuses and commissions, you can refer to the ATO's tax tables or consult with your accounting advisor.

     

    There's also a useful article you can read that provides comprehensive information about how bonuses and commission payments are handled.

     

    Please feel free to post again anytime you require further assistance.

     

    If my response has answered your inquiry, please click "Accept as Solution" to help other users find this information.

     

     

    Kind regards,

    Shella

    • Mantova's avatar
      Mantova
      Experienced Cover User
      10 days ago

      Hi Shella 

      Would you kindly have a look at calculation in my example below and confirm as correct. I've actually made a spread sheet up with the extra payg added and will manually change the  PAYG on each pay, as I'm not sure if doing a separate payslip would then mean two amounts of payments have to be made to each employee and two file sent to the bank? I may be wrong but anyway  will change manually. 

      Regards Robyn

    • Mantova's avatar
      Mantova
      Experienced Cover User
      12 days ago

      Thank you Sheila

      I've looked at the ATO definitions again and I think it would be Using Method A

      Can you confirm this calculation is correct please?

       

      Say Gross is $ 950 + $ 30 (bonus) = $ 980    PAYG tax from the table is $ 155  divide $ 980 by 52 weeks = $ 18.85 add this to $ 980 = $ 998.85 so the new PAYG would by $ 161

      so an extra $ 6.00 extra per week. Does this look correct?

       

      Do I need to then use the separate payslip and put the gross in at $ 30. PAYG $ 6.00?

       

      Please advise thank you.

       

      I thought a weekly incentive would just be included in the total gross wages and taxed accordingly.

       

      Regards Robyn