Skip to main content

Processing Bonus and Commission Payments

Bonus and commission payments are additional earnings paid to employees on top of their regular pay. These payments are subject to PAYG withholding tax and may attract superannuation depending on your obligations.

Prerequisites​

Ensure you have the appropriate pay items set up:

  • Bonus — a fixed-amount earnings pay item.
  • Commission — typically a fixed-amount or percentage-based earnings pay item.

If these do not exist, create them under Payroll > Pay Items. See Create a New Pay Item.

Adding a Bonus or Commission to a Pay Run​

  1. Navigate to Payroll > Pay Runs and open the relevant pay run.
  2. Click on the employee's name to view their pay details.
  3. Click Add Pay Item.
  4. Select Bonus or Commission from the dropdown.
  5. Enter the payment amount.
  6. Tax will be automatically calculated. Bonus and commission payments are taxed using ATO Schedule 5 (lump sum) rates by default.
  7. Superannuation will be calculated if the pay item is configured as OTE (Ordinary Time Earnings).
tip

If you need to pay a bonus outside the normal pay cycle, you can create a separate unscheduled pay run for just that employee.

Tax Considerations​

Bonuses and commissions may be taxed at a higher marginal rate because they are added to the employee's regular earnings for that pay period. If the auto-calculated tax seems too high, you can override the tax amount, but ensure the override is compliant with ATO guidelines.

Superannuation on Bonuses​

Under the Superannuation Guarantee, bonuses and commissions are generally considered OTE and attract super at the current SG rate (11.5% for 2025-26). Check the pay item's super settings under Tax and Super Settings for Pay Items.