ETP Payment Summary Tax showing incorrectly

Lisa_8612573
Lisa_8612573 Member Posts: 2
edited March 2017 in Accounts Hosted
I am processing an ETP, Post 1983 Untaxed (R), Tax $0, as confirmed with accountant and ATO rulings. It is a compensation payment for unfair dismissal. Termination was last financial year, payment made this financial year. I set up Payroll item as per Quickbooks instructions and PAYG shows correctly as $0 on payslip but on ETP Payment Summary it shows at 49%. What have I done wrong? Thanks, Lisa.

Comments

  • Reckon FAQs
    Reckon FAQs Reckon Staff Posts: 357 Reckon Staff
    edited March 2017
    Hello Lisa,

    Welcome to the Reckon Community.

    Please talk to your accountant again about the tax status of the compensation payment as the ATO website states that compensation for unfair dismissal is subject to ETP concessional tax rates.  

    According to our guide on Terminating Employees,  the applicable tax rate will be 17%, 32% or 49%, depending on age and whole-of-income considerations.  

    The ETP item you used taxed at the maximum 49% rate.  Using the Post 1983 Untaxed Element (Low Rate Threshold) will select either 17% or 32% according to the age of the employee.

    In processing termination pays, you need to calculate the appropriate amount of tax and enter this tax amount manually on the pay, as the tax tables do not contain the ETP tax rates.  The ETP Payment Summary will calculate and publish the correct amount of tax irrespective of the amount you entered onto the pay.  The difference between the amount you entered on the pay and the ETP Payment Summary calculation will be posted to the INB Payment Summary.  

    Hope this explains the ETP situation.


    regards,
    John.
  • Lisa_8612573
    Lisa_8612573 Member Posts: 2
    edited August 2016
    Hi John
    Thanks for your reply.
    I also used the ATO Tax calculator and it came up with nil tax to pay.  I will go back to accountant to clarify the correct tax application.
    I have now changed the ETP type to Post 1983 Untaxed Element (Low Rate Threshold) and entered the tax manually at 32% as employee is under preservation age. The ETP Payment Summary is now showing the amount of tax I entered manually on the pay cheque, which is correct. However, when I go into the INB Payment Summary it also shows the same tax amount (no gross pay). Again, what have I done wrong?!

    Lisa