Message-ID: <1782034160.20788.1579768707758.JavaMail.csuser@audmzcmscf01.aumeldmz.local> Subject: Exported From Confluence MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_Part_20787_261518785.1579768707749" ------=_Part_20787_261518785.1579768707749 Content-Type: text/html; charset=UTF-8 Content-Transfer-Encoding: quoted-printable Content-Location: file:///C:/exported.html Back pay

# Back pay

You might owe an employee back pay to account for a wage incre= ase, or to make up for an incorrect pay rate.

Back pay is the difference between:

• how much the employee should have been paid over the back pay period, a= nd
• how much the employee was actually paid.

Once you've worked out the back pay amount, set up a new earning pa= y item to include the back pay on the employee's next pay.

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Tax on bac= k pay

Tax on back pay can get complicated, and our example b= elow is a simple one. Seek advice from your accounting advisor or the ATO/I= RD for help with your specific back pay needs.

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Before proceeding, make sure you've updated the employee's pa= y details to reflect their updated wage.

OK, let's step you through how to handle back pay.

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1. Work out what the employee should have b= een paid
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### Work out what t= he employee should have been paid

The easiest way to work this out is to review a sample&nb= sp;pay for the employee using their updated wage details.

1. From the Payroll menu, chose Enter pay.
2. Select the employee then click Start pay run.
3. Take note of the Gross and PAYG/PAYE = values. Here's our example for a weekly pay which we've also multiplied by = 4 to get values for a 4 week pay: 4. If necessary, multiply the values based on the number of week= s of back pay that is due.
5. Cancel the pay without saving, e.g. go to the Dashboard or any other pa= ge.
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2. Work out what the employee was actually = paid
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### Work out what the = employee was actually paid

Run the Payroll summary report to see what the employee was actually pai= d for the back pay period.

1. From the Reports menu, choose Payroll summary = & details. The Payroll reports page appears.<= /li>
2. Use the From and To dates to specify = the back pay period.
3. Click Summary report.
4. Take note of the Gross and PAYG/PAYE = values for the back pay period.
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3. Calculate the back pay
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### Calculate the back pay

To calculate the back pay, subtract what the employee was actually paid = from what they should have been paid.

This example shows the employee should have been paid \$1500 in gross pay= but was actually paid \$1400. This means they are owed \$100 in back pay. Th= is can also help to work out if additional tax needs to be withheld. In our= example, \$10 of tax needs to be withheld from the back pay. =20
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4. Set up a new earning
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### Set up a new earning

You can set up a new earning pay item called "back pay" to appear on the= employee's pay.

1. From the Payroll menu, choose Employees.
2. Click the employee's name.
3. Click the Pay items - earnings & deductions tab.
4. In the Earnings section, click the Add Earning= dropdown arrow then choose + Create new earning.= 5. Set the earning up as follows:
• Type =3D Standard earning
• Name =3D Back Pay
• Name for payslip =3D If you'd like a different, more p= ersonalised, name to show on the employee's payslip for this earning, e.g. = Back Pay - Steven
• Rate =3D Fixed amount
• Amount \$ =3D 0.00
• Tax =3D Taxable
6. (Australia only) Select the applicable ATO reporting category for Single Touch Payroll reporting. If unsure, check with your acco= unting advisor or the ATO. Learn more about Assign ATO reporting= categories for Single Touch Payroll.
Here's our example. If you're = not sure whether you should select the Super (AU) or Exclude CEC 7. Click Save.

You can now pay the back pay as shown below.

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5. Pay the back pay
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### Pay the back pay

The simplest way to pay the back pay is to include it in the employee's = next pay.

Here's how:

1. From the Payroll menu, chose Enter pay.
2. Select the applicable dates under Confirm dates.
3. Select the employee then click Start pay run.
4. Determine the PAYG/PAYE payable:
1. Take note of the PAYG/PAYE value shown = in the employee's pay.
2. Add the back pay tax amount calculated in task 3 above to work out the = total tax payable. You might need help from your accounting advisor or ATO/= IRD to ensure the tax is correct.
5. Next to the Back Pay earning, enter the gross value of= the back pay. In our example this is \$100.
6. Change the  PAYG/PAYE  value to the figure y= ou determined at step 4. Here's our example with \$100 entered against the&n= bsp; Back Pay  earning and \$10 added to the P= AYG value.
7. Complete the pay as normal.
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