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Bookkeeping – June wages are paid in July – which tax year will apply?
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Published on Sunday, 10 July 2022 21:04
Client asked – Quick question - What happens if some JUNE wages are paid in JULY? Which tax year will that pay apply to?
The next pay run is to be made the first week of July. This includes a couple of days of JUNE. Does any of this have to be put through in EOFY with June? Or will it be first payment for New Financial Year on new tax tables?
Explanation – Payroll is recorded as a cash payment in the accounts – that is, WHEN it is paid.
Regardless of what period it covers – it is WHEN it is paid that matters. So the pay run is not included in the previous tax year but in July the next financial year.
You can finish your payroll year, prepare the STP Finalisation/Payment Summaries – also check you include in your Gross Payments, any NEW payroll types/categories if you created any during the year.
Then roll forward to new payroll year, and you can process the 7/7 payroll that covers the end of June days and some of July days.
To confirm – see the ATO discussion here, and also, you can find information about end of year payments to employees on the ATO website.
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