Tanda can automate tax calculations for bonuses and commissions using Method A on the Schedule 5 Tax Table. To automate the Schedule 5 calculations, Tanda requires that bonuses are processed with the regular salary and wages, otherwise Schedule 5 tax payments can be added to the pay run manually.
This article covers how to apply lump sum payments to an employee's payslip.
Creating a Lump Sum Type
Navigate to Payroll > Settings > Lump Sum Types and click New.
Complete the fields and click + Create.
STP type: There are several options when selecting an STP type, including:
Bonus or Commission: Used to pay standard bonuses, commissions or similar lump sum payments.
Lump Sum W: Used for return-to-work payments
Applying a Lump Sum Type to a Payslip
When processing payroll, navigate to an employee's payslips via Payroll > Run Payroll and click on their name.
Under the section titled Lump Sum Payments, click Add.
Enter an amount.
You will see a new row appear in the Taxes section, titled PAYG Schedule 5. The applicable amount to be withheld for the lump sum payment will appear here.
Frequently Asked Questions
How does Method A calculate how much tax to withhold?
How does Method A calculate how much tax to withhold?
This method calculates withholding by apportioning additional payments made in the current pay period over the number of pay periods in a financial year and applying that average amount to the gross earnings in the current pay period.