HOW TO CORRECTLY CALCULATE AND RECORD INTO RECKON ACCOUNTS, TAX ON A BONUS or PAYOUT

An employee who receives a one-off bonus or payout will have to pay a little tax on that bonus, however so that they do not grossly overpay tax on their bonus you should calculate and record the tax as follows.

  1. Begin to record the employees’ usual pay in Reckon Accounts. Enter all their usual hours and amounts.
  1. Write down the amount of PAYGtax that it says is on their usual pay (you will see it in the employee summary on the right hand side)
  1. From within their pay choose the "Bonus" payroll item (in the "Other payroll items" section) (or the appropriate payroll item if it is a payout).
  1. Divide the total bonus/payout amount by either 52 (for employees paid weekly)

26 (for employees paid fortnightly)

Or 12 (for employees paid monthly)

  1. In the Rate box next to the Bonus item record the amount calculated in Step 4 above.
  1. The employees’ tax amount will now change. Write down the new amount.
  1. Subtract the old amount of tax from Step 2 from thenew amount of tax fromStep 6.
  1. Multiply the amount you just calculated in Step 7 by:

52 (for employees paid weekly)

26 (for employees paid fortnightly)

Or 12 (for employees paid monthly)

THIS IS THE AMOUNT OF TAX THE EMPLOYEE SHOULD PAY ON THEIR BONUS/PAYOUT.

  1. Add this amount calculated in Step 8 to your original amount of tax from Step 2.

THIS IS THE AMOUNT OF TAX THE EMPLOYEE SHOULD PAY ON THEIR BONUS PLUS THEIR REGULAR WEEKS PAY.

  1. Cancel out of the pay - do not record it.
  1. Begin to record the employees’ usual pay in Reckon Accounts again.Enter all their usual hours and amounts.
  1. From within their pay choose the "Bonus" payroll item (in the "Other payroll items" section). (Or the appropriate payroll items if it is a payout)
  1. In the Rate box next to the appropriate payroll item/s record the whole amount of the bonus/payout the employee is to receive.
  1. Now go to where their tax has been calculated automatically by Reckon Accounts. It will probably be quite high. In the amount column, manually override the auto-calculated amount, with the amount you calculated in Step 9 (THE TOTAL AMOUNT OF TAX THE EMPLOYEE SHOULD PAY ON THEIR BONUS + THEIR REGULAR PAY). This amount should be significantly less than the auto-calculated amount and is far more accurate.

(MAKE SURE WHEN YOU RECORD THIS YOU PUT A NEGATIVE (-) SIGN IN FRONT OF THE AMOUNT - Your Net pay should be less than your gross pay when you take the tax off it, NOT MORE).

  1. Save and Close the pay as per usual.