Introduction

Use Taxation override transactions to adjust the tax on the whole pay.

To do this you need to insert an allowance with Type set to T. Taxation Override.

Fields

Use lump sum only:

• Yes

  Calculates Lump E only and disables all fields aside from Lump E.

• No

  Enables Override amount and Override type.

  Note: When reversing LUMP E, you should not end up with a negative LUMP E value at the end of a tax year as this will not be able to be reported on the payment summary reports. You will receive warnings on the annual payment summary if there are negative Lump Sum E values.

Override amount:

The value that you enter in this field depends on the Override type value as explained in the table in the following section.

Override type:

• %

  Used for employees who must pay a specific percentage of tax.

• Fixed

  Used to specify the exact amount of tax the employee pays. Use Fixed when you are reversing a pay.

• Period

  Used when a lump sum payment is equivalent to a number of Standard pays. For example, an employee is paid for three weeks' annual leave and they are paid weekly so the payment is equal to three weekly pays.

  Marginal tax calculations for extra payments, such as bonuses, are made only on whole periods. If you enter an Override amount for part of a pay period, such as 6.5, then PayGlobal will truncate the period value to a whole number, such as 6.

• +

  Taxes the employee normally and then adds the Override amount value.

• -

  Taxes the employee normally and then subtracts the Override amount value.

• 1 +%

  Adds a percentage of the gross (defined in the Override amount field) to the tax deducted.

• 2 -%

  Subtracts a percentage of the gross (defined in the Override amount field) from the tax deducted.

• Death

  Use this option only when an additional payment is made after the 'final' payment upon death of an employee. For example, for a commission or bonus payment was not known at the time of the original payment or when a backpay is necessary to reconcile the deceased employee's records

  If Override type = "Death", then Override amount = 0.00. Transactions that use this override type have the resulting payment amount recorded in the employee's Accum (ii) tab | Final pay upon death $ field.

• T.ETP

  When you process a pay that contains an ETP, PayGlobal creates a taxation override transaction with Override type = "T. ETP". However, you cannot manually create "T. ETP" transactions.

Multiply Fixed Transactions:

• Yes

  Select "Yes" if the employee has fixed-type allowances or deductions that usually occur every pay period. PayGlobal will multiply these transactions by the Override amount.

  When you add a Taxation Override transaction and set Multiple Fixed Transactions to "Yes", pay processing applies the Override amount to all fixed value allowances and deductions, including those created by payroll rules.

  Note: You must follow best practice ranking recommendations when you set up payroll rules.
  - Superannuation allowance payroll rules: Rank = Z or ZE
  - Other allowance payroll rules: Rank = A or G.
  - Deductions payroll rules: Rank = P or S.

• No

  Select "No" if the employee has fixed-type allowances or deductions that you do not want to use every pay period, such as meal allowances.

Override type and Override amount

The following table explains the relationship between the Override type and Override amount values.

Lump sum components

Lump sum payments include bonuses, gratuities, retirement payments and backpays.

Lump A - D: Automatically populated based on values in the Employee Termination Payment Summaries record.

Lump E: Backpay amount for pays more than 12 months ago.

Lump E Derived Tax Year: The tax year for which the original payment was made, that is now being corrected by an arrears payment.

C Tax: Tax on the Lump C component.

Final pay upon death: Populated only when Override type = "Death".

Processing Bonuses and Lump Sum in Arrears "Pays"

These types of payments are subject to marginal tax calculation.

In scenarios where an employee has a student loan (STSL) and or medicare levy surcharge (MLS) payment obligations AND the tax calculated for the pay exceeds the marginal tax cap, then MLS will be reduced first, followed by STSL and lastly (if necessary) PAYG.

Total Tax:

The Total Tax read-only field shows the combined tax amount for this transaction, made up of PAYG, STSL and MLS.

STSL:

When you process the pay, the Study and Training Support Loan amount for this transaction is displayed in this read-only field.

MLS:

When you process the pay, the Medicare Levy Surcharge amount for this transaction is displayed in this read-only field.

Note: To see Total Tax, STSL and MLS values on a transaction with Source = "Transaction Added/Changed", you need to use the Ctrl+D shortcut key to open it, rather than double-clicking it.