Home – New Forums Money matters Tax on Bonus/Commission Payments

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  • #977641
    happygirl
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    Hope you all enjoying the long weekend.

    Hoping someone can help me please with respect to the following:

    1) How Bonus Payments should be calculated if they relate to one period
    2) How Bonus/Commission Payments should be calculated if they span numerous periods.

    I have tried to read up about it on the ATO website, but finding it too hard to understand!!

    Thanks you kind folk.

    #1099477
    MelissaN
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    I know it can seem complicated but it’s quite easy.

    Use the examples to help: http://www.ato.gov.au/businesses/content.aspx?doc=/content/50506.htm

    1) Use the tax table to work out the PAYGW on their normal weekly (for example) pay

    2) Divide the bonus by the number of pay periods (say 52)

    3) Add this to the amount of their normal weekly pay

    4) Disregard any cents

    5) Use the tax table to work out the PAYGW on their normal pay PLUS the weekly portion of the bonus

    6) Take Step 1’s tax away from Step 5’s tax

    7) Multiply Step 6’s result by 52

    8) This is the total PAYGW to pay on the bonus

    If the bonus relates to only 1 period, it’s taxed at the standard tax rate for the period.

    Please let me know if you’re still confused

    #1099584
    MelissaN
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    • Total posts: 111
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    I know it can seem complicated but it’s quite easy.

    Use the examples to help: http://www.ato.gov.au/businesses/content.aspx?doc=/content/50506.htm

    1) Use the tax table to work out the PAYGW on their normal weekly (for example) pay

    2) Divide the bonus by the number of pay periods (say 52)

    3) Add this to the amount of their normal weekly pay

    4) Disregard any cents

    5) Use the tax table to work out the PAYGW on their normal pay PLUS the weekly portion of the bonus

    6) Take Step 1’s tax away from Step 5’s tax

    7) Multiply Step 6’s result by 52

    8) This is the total PAYGW to pay on the bonus

    If the bonus relates to only 1 period, it’s taxed at the standard tax rate for the period.

    Please let me know if you’re still confused

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