We need to make a back payment to a former employee. this is the result of an oversight and goes back to 2018. what method do i use to calculate the tax to be withheld. it does fall into a Lump Sum E payment
Hi @brosnan,
You will need to use the Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments.
There is Method A or Method B (ii) you can choose from. There are step by step instructions how to work out the withholding amount based on the method you choose to use.
This is used for back payments including lump sums in arrears. Where a payment was meant to have been made in a prior period such as an employee's wage being underpaid due to an error or an oversight.
Hi @brosnan,
You will need to use the Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments.
There is Method A or Method B (ii) you can choose from. There are step by step instructions how to work out the withholding amount based on the method you choose to use.
This is used for back payments including lump sums in arrears. Where a payment was meant to have been made in a prior period such as an employee's wage being underpaid due to an error or an oversight.
Wendy
I have to process Lump Sum E payments for multiple previous Financial Years. They are all greater than the Lump Sum E threshhold. As none of the payments are related to the current Financial Year, is it correct that I enter into my system each period & the amount, but I do not deduct any tax for these amounts? When the ex-employee completes his tax, this will all be worked out by ATO for each period? Especially since his returns for each year are likely finalised already?
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