Schedule 5 – Tax table for back payments, commissions, bonuses and similar payments
Schedule 5 was introduced in October 2016 as a uniform method for calculating tax on back payments, commission, bonuses and similar payments.
Schedule 5 contains 3 methods;
- Method A: Used for any additional payments made regardless of the financial year the additional payment applies to. This includes all back payments, commissions, bonuses or similar payments.
- Method B (i): Used for any back payments applied to specific periods in the current financial year.
- Method B (ii): Used for back payments that relate to a prior financial year and any additional payments (including commissions, bonuses or similar payments) that don’t relate to a single pay period regardless of the financial year the additional payment applies to.
How does Schedule 5 work when used during a pay run?
- Method A: A prompt will display which requires entry of the number of pay periods (1 – 52) this Pay Rate will be taxed over.
- Method B (i): A prompt will display which requires selection of the date range the Employee was underpaid for so that the tax can be calculated correctly.
- Method B (ii): Tax is calculated automatically over the whole year (52 Weekly, 26 Fortnightly or 12 Monthly pay runs).