Recording Back Pay
Back Payments are amounts to be paid to the employee that relate to previous pay periods. An example of Back Payment is when there is an award pay rise that applies from an earlier date.
To record a Back Payment
1. Click on the [Other Payments] button on Process Pays page
2. Click the Back Payments tab.
3. To add a new Back Payment, click the [Add] button.
4. Choose the Back-Payment Type from the drop-down list.
3. To add a new Back Payment, click the [Add] button.
4. Choose the Back-Payment Type from the drop-down list.
The Tax Office provides a table of Back Payment Types that determines whether the payment is to be included for superannuation purposes (OTE), and where the amount is shown on the employee’s PAYG Payment Summary.
5. Choose the Period Accrued from the second drop-down list.
The period over which the Back Payment is accrued influences how it is taxed and whether or not it is classified as Salary and Wages or a Lump Sum E on the PAYG Payment Summary.
Consequently, if the back payment covers more than one payment period, you will need to divide the amount into the separate periods.
If the period selected is Earlier Financial Year more than 12 months ago you will need to specify the financial year accrued.
Consequently, if the back payment covers more than one payment period, you will need to divide the amount into the separate periods.
If the period selected is Earlier Financial Year more than 12 months ago you will need to specify the financial year accrued.
NOTE: If you have a Back Payment that is $1200 or more accrued more than 12 months ago, it will become a Lump Sum E but if the amount is less than $1200 it will form part of Wages and Salary.
6. Enter the amount of the back pay into the Amount box.
7. Click on the [OK] button.
8. The Back Payment will be added to the normal pay when you click on the [Calculate] button.
9. If the Back Payment relates to a period that extends beyond the normal pay period, enter the number of pay periods over which the tax calculation is to be made.
10. The Back Payment will show on the Pay Summary as a separate item.
7. Click on the [OK] button.
8. The Back Payment will be added to the normal pay when you click on the [Calculate] button.
9. If the Back Payment relates to a period that extends beyond the normal pay period, enter the number of pay periods over which the tax calculation is to be made.
10. The Back Payment will show on the Pay Summary as a separate item.
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