Incorrect tax calculated on weekly pay.

Micha

We have had a new employee start with a salary of $110,000 and worked for us for 1 week (38hrs) prior to the pay run.

He is entered in Reckon as being on a salary and our standard pay run is fortnightly (76hrs per fortnight). He has claimed the tax free threshold.

When I have done his first pay run for the 1 week he has worked (38hrs) the tax calculated by Reckon was $364.00 when it should have been $547.00. If I do a "Dummy" pay run for the full fortnight (76hrs) the tax is calculated correctly as $1094.00

Why has the tax calculated in correctly for his first pay run?

Tanvi_kataria

Hi @Micha

Can you please confirm what is the Pay frequency set-up for the employee in their records? If it's Weekly or Fortnightly.

If it's fortnightly in the records and you're paying for a week, is causing these incorrect calculations. You can find the detail as in the below attached screenshot -

Please check and confirm. Feel free to let us know, for any concerns. Thank you!

Regards

Tanvi

Micha

The pay frequency is fortnightly, however the employee has only worked for us for 1 week. Which is why he is only getting paid for a week.

klaura

Hi Micha,

Since the employee card's pay frequency is set to fortnightly, tax is calculated based on the fortnightly rate for all payment, whether it's for weekly or monthly pay.

There are 2 things we can do. 

1. is to override the tax to a weekly tax rate for that pay period. 

https://www.ato.gov.au/single-page-applications/calculatorsandtools?=Redirected_TWC_SPA#TWC/questions

2. To ensure accurate tax calculation for that time, change the pay frequency to weekly. Following that, you can change it back to fortnightly.

Best regards,