Please Note: Tanda can automate tax calculations for "Bonuses and Commissions" and "Cashed out Leave requests" using Method A on the Schedule 5 Tax Table. To automate the Schedule 5 calculations, Tanda requires these payments to be processed with the regular salary and wages. Otherwise, Schedule 5 tax payments can be added to the pay run manually.
This help guide covers paying your staff using the Schedule 5 Tax Table, including details on creating a lump sum type, applying lump sum payments to an employee's payslip, and how method A calculates the amount of tax to withhold.
What Does This Guide Cover?
Creating a Lump Sum Type
To create a Lump Sum type, navigate to Payroll > Payroll Settings > Lump Sum Types and click +New.
You will then be prompted to name your Lump Sum type and add your payroll account and STP category. 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.
For details on Lump Sum D and Lump Sum E STP types, see this ATO resource.
Once you have completed these fields, click CREATE.
Applying a Lump Sum Type to a Payslip
When processing payroll, navigate to an employee's payslips via Payroll > Run Payroll, then select the appropriate pay run and click on their name.
Under the section titled Lump Sum Payments, click Add. Then, 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.
For details on how cashed out leave requests are added and configured, please see our Cashing out leave entitlements help guide.
How Does Method A Calculate How Much Tax to Withhold?
This method calculates the withholding amount 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.
To learn more, please see this ATO resource on working out the withholding amount as well as this example.