Bonus Payments - Regular

Bonus Payments - Regular

Bonus Pay Elements - Regular 

If you pay out a bonus, it’s very important to be aware of how this should be processed. Discretionary or irregular payments are not part of Holiday Pay Liable Earnings and the annual leave rates are not affected. This is very different from a Non-Discretionary or Regular bonus or payment that is part of an employee's remuneration package. Please review Employment New Zealand website to make sure you are using the correct pay element.
Regular Bonuses are taxed according the period that they are being paid for and are subject to standard legislative PAYE, Student Loan and KiwiSaver deductions.
It is much easier to enter a gross amount and have the tax calculated instead of deciding on a set amount going into an employee's take home pay or in cash and working back. 
For more information here Inland Revenue Lump Sum or Extra Pay
For more information here Employment New Zealand - go to Discretionary payments and gross earnings
For more information here Payment Pay Elements
For more information here Bonus - Christmas

Regular bonuses - tax 

A regular bonus is any bonus paid frequently throughout the year, such as:
• monetary incentives
• production bonuses

Bonuses paid at same time as regular pay
Regular bonuses are treated as being part of the salary or wages for the employee for the relevant pay period. Add the regular bonus to the salary/wages for the pay period, then calculate
PAYE as usual according to the employee’s tax code.

Monthly bonuses covering more than one pay period
  1. Add up the gross wages paid for a month’s income, eg if you pay weekly, add the four weekly payments together.
  2. Work out the PAYE on the gross wages for the month
  3. Add the bonus to the gross wages calculated at step 1 and work out the PAYE for the month on the total.
  4. Subtract the PAYE calculated at step 2 from that calculated at step 3. This gives you the PAYE on the bonus.
Bonuses covering more than one month
  1. Divide the bonus by the number of months it covers. This gives you the monthly bonus amount.
  2. Add the monthly bonus to the normal pay for the month and calculate PAYE. Select monthly in the PAYE calculator.
  3. Calculate the PAYE on the normal monthly pay and subtract this amount from the PAYE calculated at step 2 above. This gives you the PAYE on the monthly bonus.
  4. Multiply this by the number of months the bonus covers to get the total PAYE to be deducted from the bonus.

Timesheet Entry

  1. Payroll > Enter > Enter Timesheets
  2. Select the Employee's Name
  3. Enter 1 the Green Qty box.
  4. Select > BON2 - Bonus (Regular)  from the drop down menu
  5. Enter the Amount (Gross) of the payment in Rate box
  6. +Add
  7. Calculate the PAYE from the above and override the rate.
  8. You can add Notes by clicking on this entry
  9. Save OR
  10. Use the Private Payslip Message OR
  11. Edit Global Payslip Message to display the same message to all employees (remove this message after this pay has been Closed).

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