AU: Incorrect Termination Leave Deduction For Annual Leave On Termination Due To Discrepancy In Nearest Lowest Value Of Earnings Considered For Calculation
(Doc ID 2997592.1)
Last updated on APRIL 01, 2024
Applies to:
Oracle HRMS (Australia) - Version 12.2.8 and laterInformation in this document applies to any platform.
Symptoms
Problem Statement:
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Incorrect Termination Leave Deduction because of the discrepancy in Earnings considered for calculation.
Example:
For Monthly Payroll
1. Average normal gross = (111509.52 - 4276.24)/11 = 9748.48
2. Disregard any cents = 9748
3. Amount to be withheld from normal gross earnings (9748) = 2574.00** ------ as per ATO monthly tax table
4. Divide the amount of annual leave on termination payment by number of normal pay periods (4276.24/12) = 356.35
5. Disregard any cents = 356
6. Add the amount at step 5 to the amount at step 2 = (356.00 + 9748.00) = 10104.00
7. Work out the amount to be withheld from the amount at step 6 (10104.00) = 2700.00 ------ as per ATO monthly tax table
8. Subtract the amount at step 3 from the amount at step 7 (2700.00 - 2574.00) = 126.00
9. Multiply the amount at step 8 by number of normal pay periods (126.00 × 12) = 1512.00
As per ATO Monthly PDF tax table,
Monthly Earnings Amount to be withheld (With tax‑free threshold)
9741.33 2570.00
9745.67 2570.00
9750.00 2574.00
Current System Calculation:
9748 is closer to 9750.00 rather that 9745.67
So, Tax on Average Normal Earnings is considered as 2574.00 instead of 2570.00
Expected Calculation (as per ATO - Australian Tax Office):
"If exact earnings amount are not shown in the table, use the nearest lower figure."
Going by this, the nearest lower figure for 9748 is 9745.67. So, the Tax should be 2570.00 instead of 2574.00
++ Termination Leave Deduction of 1512.00 is incorrect because of the Earnings considered by the system.
For Monthly Payroll
1. Average normal gross = (111509.52 - 4276.24)/11 = 9748.48
2. Disregard any cents = 9748
3. Amount to be withheld from normal gross earnings (9748) = 2574.00** ------ as per ATO monthly tax table
4. Divide the amount of annual leave on termination payment by number of normal pay periods (4276.24/12) = 356.35
5. Disregard any cents = 356
6. Add the amount at step 5 to the amount at step 2 = (356.00 + 9748.00) = 10104.00
7. Work out the amount to be withheld from the amount at step 6 (10104.00) = 2700.00 ------ as per ATO monthly tax table
8. Subtract the amount at step 3 from the amount at step 7 (2700.00 - 2574.00) = 126.00
9. Multiply the amount at step 8 by number of normal pay periods (126.00 × 12) = 1512.00
As per ATO Monthly PDF tax table,
Monthly Earnings Amount to be withheld (With tax‑free threshold)
9741.33 2570.00
9745.67 2570.00
9750.00 2574.00
Current System Calculation:
9748 is closer to 9750.00 rather that 9745.67
So, Tax on Average Normal Earnings is considered as 2574.00 instead of 2570.00
Expected Calculation (as per ATO - Australian Tax Office):
"If exact earnings amount are not shown in the table, use the nearest lower figure."
Going by this, the nearest lower figure for 9748 is 9745.67. So, the Tax should be 2570.00 instead of 2574.00
++ Termination Leave Deduction of 1512.00 is incorrect because of the Earnings considered by the system.
Steps To Reproduce:
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1) Responsibility: AU HRMS Manager
2) Navigate to People > Others > End Employment
3) Terminate the employee
4) Navigate to Assignment > Others > Quickpay
5) Run Quickpay
6) Check Termination Leave Deduction in Statement of Earnings (SOE)
Cause
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In this Document
| Symptoms |
| Cause |
| Solution |
| References |