Withholding tax calculation is wrong
Hi, I am having an issue with the latest Reckon Payroll app where the Withholding Tax calculation is higher than what the ATO calculator tool https://www.ato.gov.au/Calculators-and-tools/Tax-withheld-calculator/ says it should be.
I do not have a Premium subscription for the software. The only earning items that have an auto tax calculation as far as I can see are those that are in the "Normal earning items" category, so that is what I am using. I tried it with the "Ordinary" earnings item and I also tried setting up my own one one called "SAW (Salary and Wages)", which is the Income Type I understand the ATO requires for normal wages in STP phase 2 (is everyone else doing that too?...I digress but let me know if I misunderstood!).
These "Normal earning items" have an hourly rate (fixed salary type is not available) and the "Tax applicable" and "Include in super guarantee calculation" both ticked. There are no other options available in the item setups.
The employee is setup as a full-time employee with a 38 hour week, so when creating the pay run I enter 38 hours for a 5 day working week and convert the weekly salary to an hourly pay-rate (weekly salary / 38 hours) for the hours.
The weekly salary calculates correctly using the hours and pay-rate, the Super amount calculates correctly using 10.5%, it's just the withholding tax amount that is wrong. I know I can override it and manually enter the amount, but it would be good if I could exclude having to perform this step.
Can someone please advise why the tax amount calculates could be wrong and how to fix it? if you need any more specific info on my payrun e.g. the exact amounts and amounts calculated by the app, please send me a private message. Many thanks
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