Bonus Transactions

The Australian Tax Office classes bonuses as irregular payments, so they are taxed at the average marginal tax rate. Irregular and one-off payments are lump sum payments that are paid annually or as special bonuses.

For example:

• Bonuses
• Commissions
• Lump sum payments for untaken long service or annual leave cash outs
• Annual leave loading (17.5%)
• Retirement or redundancy payments
• Gratuities
• Backpays
• Restrictive covenant or exit inducement payments
• Lump sum payments on termination
• Return-to-work payments.

In this example, you opened the manual pay after closing Standard Pay # W/1 so the Pay Status form shows the following details:

You will use the manual pay to pay bonuses to the Sales staff, but you will also have to add tax override details to ensure that employees are taxed correctly.

Topic: 39201