Pay Commission

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For an employee receiving commission payments on top of a salary, the IRD says to add the gross commission to their gross wage for the period in which it was paid and calculate the tax on the total amount.

When this is the case, you can add sales commission to an employee pay by adding the pay code Commission to their pay. There is nothing particularly special about Commission, it is a standard Gross Earnings pay code.

If the commission payment covers more than one month you will need to tick Exclude From Ordinary Earnings on the pay code, so that these payments don't skew the 4 week average calculations.

If the Commission has been earned over more than one pay period then there are some other changes required to the standard Commission pay code. You should change it to:

  • Be a Taxable Allowance
  • Tick Spans Multiple Pay Periods and enter the number of months it covers. 

For example, if you pay your employees weekly or fortnightly, but pay commission monthly, you'd set it up with Spans Multiple Pay Periods ticked and Months set to 1:

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