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  1. AU Payroll - Include commission & bonuses calculation on Schedule 5

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    15 comments  ·  Payroll & expenses » Payroll  ·  Admin →
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    Accepted  ·  AdminDavid Reynolds (Admin, Xero) responded

    Hi everyone, thanks for your feedback on Schedule 5 calculations for commissions and bonuses. We appreciate you explaining how important this is for commission-based industries where commission is often the primary income.

    Currently Xero payroll requires regular earnings to calculate Schedule 5 tax. We understand the current setup requires manual workarounds when employees have commission-only income.

    Our product team has reviewed this idea and moved it to Accepted so it can be formally considered in future planning cycles. We'll keep you updated as things progress.

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    Lalaine Hernandez commented  · 

    If the commission is for a specific single pay period and it's their only source of income, should it not be computed using the standard PAYG withholding tax table? And not the PAYG on Schedule 5? Please refer to the ATO statement below:

    https://www.ato.gov.au/rates/schedule-5---tax-table-for-back-payments,-commissions,-bonuses-and-similar-payments/?page=2

    If a commission, bonus or similar payment relates to work your employee performed for more than one pay period (or for an undefined period), calculate withholding by applying either Method A or Method B(ii).

    Do not use this schedule for payments for a single pay period.

    If the commission, bonus or similar payment relates to work your employee performed in a single pay period (for example, a week, a fortnight or a month) the amount is added to all their other earnings for the current period. Withholding is then calculated using the standard PAYG withholding tax tables.