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Create Final Pay

Click the Create Final Pay button to enable the entry of final pay details, and any employment termination payment (ETP) details and selection on what to do with unused leave. If batching is enabled, a batch number is required to be entered.

In the Payout Unused Leave section, if the payment is for a normal termination, then the Normal Gross Earnings is based on an accumulator and an option on the Module Control form.

Select the tax scale that the employee is usually taxed at. This defaults from the employees default tax line. If the payment is for a special termination, select the Special option.

If an ETP payment is required, select the ETP section and enter the amounts and select the ETP code that is applicable. ETP amounts are not calculated and must be calculated and entered.

An ETP payment summary is only required if the employee has a taxable component. If ETP comprises only a tax free component, then an ETP Payment Summary is not required and the ETP option should be deselected.

The tax free component of the ETP should be included in the Lump Sum D on the Payment Summary Configuration form.

Note: 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 are not calculated, these figures must be calculated and added. 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.

The final pay should include items that the employer is paid in the final pay packet. This may include extra hours or days worked between last pay date and termination date, allowances or bonuses.

The payout of unused leave on normal and special termination are taxed differently. You can enter ETP amounts on the final pay. 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.

Note: You must enter the number of tax periods before clicking the OK button.

Once all the details of have been entered, click OK and a pay entry form containing the details displays.

After you make any changes and save the pay, you are returned to the terminate employee form. Click the Calculate Accruals button. The balance with the normal balance tracked transaction type is transferred to the payout transaction type (via a Balance Adjustment) as established in the Balances tab on the pay transaction type. Payout balances will then be added to the final pay created in the first step.

Click the View Final Pay button to review he final pay, with the payout balances, Once satisfied with the final pay, create the payment.

Once paid, click the Terminate Employee button. This updates the employee with a termination date, flag them as inactive for payroll and set their status as inactive.

Where an Eligible Termination Payment is entered, the Print ETP Summary button is enabled and you can print the ETP Summary. If required, you can also print a separation certificate.

If the employee:

Was terminated incorrectly, click the Un-Terminate Employee button. The final pay are deleted and any balance adjustments that were made as part of the termination are deleted.
Is re-employed, you must add them as a new employee.

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 to include in the final pay.

Tax Periods

Enter the number of tax periods 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 on the Module Control form 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.

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. You can journal amounts 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. You can journal amounts 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. You can journal amounts 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.