I have an employee who is taking annual leave with annual leave loading, it calculated the leave loading correctly but it is taxing the leave loading. I don't know how to setup the leave loading calculation so it does apply tax to the calculated amount.
I assume i am entering it correctly, in the pay run i click on actions then take leave, in the leave taken I choose annual leave and i can see the apply 17.5% loading is ticked, i enter the hours 38hrs and it calculates the amount correctly but it is taxing the leave loading.
I am sure there is a setting that excludes it from PAYG tax but i can not find it, and help would be appreciated.
Thanks for coming to the Community for help, @Heidi Book Keeper.
You're already on the right track when setting up your leave loading. However, we don't have the option to exclude taxes on payroll settings.
This will depend on the total amount calculated. If you haven't exceeded the $320 amount, it'll be excluded from tax.
For additional information about annual leave, you may check this helpful blog: Annual leave payroll tips with Quickbooks Online and Keypay.
Please know that you can count on me. Hit the comment section if you have any questions or concerns. Wishing you the best!
Thanks for getting back to me, not sure why you said we don't have the option to exclude taxes on payroll settings.
When under payroll settings under pay categories i have annual leave taken and there is a tick box for PAYG Exempt & Payroll tax exempt?, see attachment.
And the leave loading calculated was only $148 but it was still taxed?, i had to put in a PAYG Adjustment to remove the tax deducted.
So moving forward i am not sure what to do, do i always have to enter a PAYG adjustment because leave loading is always taxed, other software i have used there is an option to exclude tax from leave loading.