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Please Note: While we try to provide you with the solution you need, we cannot warrant that the information set out in this document is totally error free or will necessarily resolve any problem you may have.” Reckon Limited ABN 14 003 348 730 | Level 12, 65 Berry Street North Sydney NSW 2060 Australia T +61 2 9577 5000 | F +61 2 9577 5555 | info@reckon.com.au | www.reckon.com.auTerminating an Employee in Accounts Business When workers leave the employ of the business, whether it is voluntary or involuntary, they will oftenbe entitled to a number of additional payments above their normal pay. In many cases this will mean the Accounts Business user will need to create additional payroll items to process these payments. Some of these payments may have special tax treatments. When completed the employee’s record needs to be marked as terminated. Taxation treatment of the various termination payroll items are different to the normal PAYG tax rates, so users must take particular care in applying termination payroll items to employees. In general there are two types of termination payments: 1. Items appearing on the Individual Non-Business Payment Summary: a. Payout of Unused Annual Leave b. Payout of Unused Long Service Leave c. Tax Free component of a genuine redundancy d. Reimbursement or expenses incurred in previous years 2. Additional items to appear on the Eligible Termination Payment (ETP) Payment Summary: a. All other payments not included in 1 above. The ATO provides information on terminating an employee at: http://www.ato.gov.au/Business/Employers/Worker-s-last-day/What additional payments an employee is entitled to will depend on his employment contract, award conditions, general requirements of industrial relations law and the circumstances of the departure. Accounts Business users should work with their accountants and managers to determine what entitlements apply in each case. In this guide we will outline the types of payments an employee may be entitled to, how they are reported on the Payment Summary and how they are handled by Accounts Business. It has been prepared with information available at 31/8/2013 for use in Accounts Business 2013 R2. Conditions of termination payments and their tax treatments can change frequently so users should always check with their Accountants and the ATO for the latest relevant information.
2 QuickGuide to terminating an employee 1. Process last normal pay 2. Calculate additional payments and associated taxes 3. Process additional payments (appropriate payroll items may need to be created) 4. Terminate the employee in Accounts Business 5. Where applicable, process any Eligible Termination Payments (ETP) 6. Provide the employee with an INB Payment Summary and where applicable, an ETP Payment Summary Additional fields in the INB Payment Summary It is the 4 boxes labelled Lump Sum Payments A, B, D and E that are used when an employee leaves the business.