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Create Final Pay

You must enter additional details on the Create final pay form to ensure the pay is correct. Only the Pay Periods, Tax Periods, and final pay default lines apply to New Zealand.

If the employee was employed before 18^th August 1993 and has a normal termination, the tax on unused annual leave and long service leave will not be calculated, these figures must be calculated and added. In addition, if the employee was employed before 16^th August 1978, the tax on unused long service leave will not be calculated, these figures must be calculated and added.

Taxation of Unused Leave

The payout of unused leave on normal and special termination are taxed differently. The ETP amounts can be entered on the Final pay, but to also allow flexibility, the Total value displayed includes the ETP amounts from the final pay and any amounts that have been put to those transaction types in other pays or journals for the current financial year.

Normal Gross Earnings

Normal Gross Earnings are taken from the employee's pay based on several options. The accumulator and setting from Payroll | Tax Config in the Normal Gross Earnings section is used to calculate the Normal Gross Earnings. The Last Pay option takes the normal gross earning to the pay transaction types that are included in the accumulator that is selected for the last paid pay.

If you change the option to Average for year, you will get the average for the last financial year. This is used when the pay fluctuates significantly over a number of pay periods. You can change the last pay or average for year setting on the Employee | Tax Config tab.

The accumulator used for the calculation of normal gross earnings should include all payments, except those relating to termination payments, received in the last full period of employment (this includes taxable allowances, overtime, bonuses and the like). A payee's normal gross earnings are those earnings relating to the last full pay period worked.

Due to their complexity, you should thoroughly check all calculations, leave accruals and payouts for all terminations.

Options Reference

Each option and field on the form is described below. Mandatory options and fields are highlighted in red.

Pay Periods

Enter the number of pay periods that you want to include in the final pay.

Tax Periods

Enter the number of tax periods that you want to include in the final pay.

Include standard Pay

Deselect this option if you don't want to include the pay lines for the employee on the final pay.

Include standard Deductions

Deselect this option if you don't want to include the deduction lines for the employee on the final pay.

Include standard Employer Costs

Deselect this option if you don't want to include the employer cost lines for the employee on the final pay.

Normal Termination

Select this option when the termination is a normal termination as specified by the Australian Taxation Office (ATO). When this option is selected, you can enter the Normal Gross Earnings and Normal Tax type.

Special Termination

Select this option when the termination is a special termination as specified by the ATO.

Normal Gross Earnings

This value is used in calculating the tax for the unused leave.

Where an accumulator is set for Average Rate in Module Control and the employee has previous paid pays, this figure is taken from a Module Control setting.

Normal Tax TT

Select the tax transaction type that the employee usually has deducted. This is taken from the employees default tax lines if it is set there.

ETP (Australia only)

Select this option if the final pay contains an Eligible Termination Payment (EPT). All ETP amounts will must be calculated and the values entered here.

final pay - Taxable Component

Enter the amount for the Taxable Component of the ETP to be included on the final pay.

final pay - Tax Free Component

Enter the amount for the Tax Free Component of the ETP to be included on the final pay.

final pay - Total Tax Withheld

Enter the amount for the Total Tax Withheld of the ETP to be included on the final pay.

Total - Taxable Component

This field displays any amounts that have been put to the Taxable Component Transaction Type in the current financial year. This allows for amounts to be journalled to the transaction type and included in the ETP report and ATO file.

Total - Tax Free Component

This field displays any amounts that have been put to the Tax Free Component Transaction Type in the current financial year. This allows for amounts to be journalled to the transaction type and included in the ETP report and ATO file.

Total - Total Tax Withheld

This field displays any amounts that have been put to the Total Tax Withheld Transaction Type in the current financial year. This allows for amounts to be journalled to the transaction type and included in the ETP report and ATO file.

ETP Code

Select the ETP code applicable for the ETP payment. The available codes are listed below:

R - Life Benefit. ETP made because of one of these:

Early retirement scheme
Genuine redundancy
Invalidity
Compensation for personal injury, unfair dismissal, harassment or discrimination.

O - Life Benefit. Other ETP not described by R, for example, golden handshake, gratuity, payment in lieu of notice, payment for unused sick leave, payment for unused rostered days off.

Multiple payments for same termination. Where one or more of these payment types:

A code R payment, or
A code O payment, or
A transitional termination payment

Have been made for the same termination in a prior year, different codes apply:

S - This is an amount which would have been a code R payment if there had been no previous payment for the termination.
P - This is an amount which would have been a code O payment if there had been no previous payment for the termination.
D - Death benefit ETP paid to a dependant of the deceased.
B - Death benefit ETP paid to a non-dependant of the deceased and you made a termination payment to the non-dependant in a previous income year for the same termination.
N - Death benefit ETP paid to a non-dependant of the deceased.
T - Death benefit ETP paid to a trustee of the deceased estate.

Amended after sent to employee

Select this option if the ETP payment summary is sent to the employee and subsequently amended. This prints an amended ETP payment summary when the report is rerun.

Amended after sent to ATO

Select this option if the Payment Summary Annual Return containing this ETP is sent to the ATO. A further Payment Summary Annual Return sent to the ATO reports the amended ETP when the Amendments only checkbox on the report is selected.