How is PAYG determined?

faigey

I am relatively new at using Reckons Mobile Payroll App and have a query which I hope someone can clarify for me please. Attached are two PDF copies of screenshots from the app to illustrate the query.

It is to do when creating a pay run.

Example 

Pay date 22/04/23. Period from 01/04/23 to 30/04/23.

Gross salary for that month = $7500

The first screenshot (1) illustrates the data at “Edit Pay Details” from the app.

The second screenshot (2) illustrates the data at “employee details” from the app. This can then be forwarded to ATO.

What I do not understand is how the figure of “PAYG $5382.00 tax withheld is obtained at screenshot (1)  

The second screenshot (2) indicates “tax $1794.00”. Now $1794.00 is in accordance with 2023 ATO tax tables for a salary of $7500.00 per month and so I believe is correct.

The app allows me to override the tax withheld amounts by entering a “custom tax withheld amount of $1794”. However, the “custom tax withheld amount of $5382.00” remains.

The way I have described this may seem confusing, but in essence what I am trying to understand is what does the figure of $5382 mean and how is it determined??

Screenshot 1.pdf

Screenshot 2.pdf

Rav

Hi @faigey

The display issue affecting tax withheld on the payrun creation screen has now been resolved. Check out the latest update in the post linked above.

Rav

Hi @faigey

What have you entered for your employee's tax settings in their employee profile? And more specifically, is it correct for what it should be for that individual's employment?

Also, are you using the default Salary earnings item or have you created your own custom one?

faigey

Hi Rav,

Thank you for taking time to respond.

Probably I may not be setting up my circumstances correctly ? My situation is as follows.

I am the sole director. I am the sole employee for my company.

So my company can pay me, the sole employee a salary at a fixed or varying rate , depending what the company earns. Leave types are not an issue. The company is Pty Ltd and GST registered and was setup to simply be used as a vehicle to earn income and then pay me, as an employee, a salary.

So in the example - I chose a figure of $7500 as the gross payment for the month of April. And if this was the same amount for every month then the $1794.00 is the correct PAYG amount as determined by the Reckons payroll app and indeed shown by ATO 2023 tax tables.

For following months the gross payment may be $6000 or may be $10000 or may be zero (eg if I am sick or on holidays say).

(1) Responding to your comments - I have experimented with the Reckons App and discovered as follows when selecting the earnings item.

(a) If I choose "ordinary" option - the “custom tax withheld amount of $5382.00” appears as well as the correct $1794.00 PAYG.

(b) If I choose "salary" option - the “custom tax withheld amount of $5382.00” appears as well as the correct $1794.00 PAYG.

(c) if I setup as you illustrate "Custom Earnings Test 1" - AND I DO NOT TICK " Super Preferences (optional) - include in super guarantee calculation and include in salary sacrifice for super calculation" then the “custom tax withheld amount of $5382.00” NO LONGER APPEARS and the correct $1794.00 PAYG is indeed shown.

(d) if I setup as you illustrate "Custom Earnings Test 1" - AND I DO TICK " Super Preferences (optional) - include in super guarantee calculation and include in salary sacrifice for super calculation" then the “custom tax withheld amount of $5382.00” appears as well as the correct $1794.00 PAYG . ie similar to those options described at paragraphs (a) and (b) above , when "Super Preferences" also are ticked.

(2) So, for the cases (a) (b) and (d), I still do not understand how the figure of “PAYG $5382.00 tax withheld is obtained as shown at screenshot (1)" - and/but I can still simply over ride this figure and specify a "correct" figure of  $1794.00. Are you able to clarify why Reckons Payroll App is providing the PAYG $5382 figure at all, what is its purpose and how is it calculated/determined for cases (a) (b) and (d).

(3) Please note also that my Payroll Expenses: Salaries & Wages item is designated as EXPENSE.6-0611. I honestly do not know understand what EXPENSE 6-0611 means and whether I should be using one of the other payroll expense items and whether this may be causing the issue??

I trust you are able to follow all of the above. Apology's if it sounds confusing. I am just trying to accurately model my situation appropriately using the Reckons Mobile App prior to the premium upgrade.

Any comments would be appreciated.

Regards

Rav

Hi @faigey

We're currently looking into an issue affecting the display of tax withheld in the pay run creation screen itself which sounds like it might be the cause of the issues you've outlined above.

Please note, it only affects the display of tax on that specific screen and I'd recommend checking out more info in the announcement linked below, I'll also keep that post updated with more info as soon as it comes to hand.

https://community.reckon.com/discussion/8033138/incorrect-tax-display-in-pay-run-creation-screen-payroll-app-web

faigey

Hi Rav

Confirming the tax display appears to be fixed