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Re: Tax on first pay

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Newbie

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Good morning, 

 

Just wanting some clarification around tax on an employee's first pay if they started part way through a pay period. 

 

For example an employee commences employment on 14 February 2020. The standard fortnightly pay period runs from 6 February 2020 to 19 February 2020. For this pay period the employee is therefore entitled to 4 days salary (14/2-19/2) - Monday-Friday days, out of possible 10 days.

 

Gross salary owed is $400 ($100 a day). As per standard tax tables (claiming tax free threshold, fortnightly pay) they are due to pay $0 tax. However as the employee started part pay is there a formula we should apply to ensure tax is calculated correctly. 

i.e fortnightly salary would normally be $1000 (10 days x $100 a day). Tax on $1000 is $72. $72 / 10 days x 4 days = $28.8 (rounded to $29).

 

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Best answer

ATO Certified

Community Support

Replies 0

Hi @Hayley040,

 

As @DuncanS suggested go with the Tax tables or use our tax withheld calculator 

 

Thanks for your question,

JasonT

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Devotee Registered Tax Practitioner

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@Hayley040 

 

I would use the Tax Tables.

 

Difference of $29 is not material and would be payable by the employee on lodging the tax return if no deductions or other adjustments.

 

Duncan.

 

 

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Best answer

ATO Certified

Community Support

Replies 0

Hi @Hayley040,

 

As @DuncanS suggested go with the Tax tables or use our tax withheld calculator 

 

Thanks for your question,

JasonT