How the "Adjust by Last Pay" option works
In a One-Off pay, how do I use the "Adjust by Last Pay" option?
In this article we explain why Adjust by Last Pay is used and how this works
The Adjust by Last Pay checkbox is available in a one off pay to determine the tax amount (PAYE in New Zealand or PAYG in Australia) in the One Off Pay for correcting the last incorrectly paid Current Pay. Screenshot below is from the New Zealand Exo Payroll and is for reference purposes only.
The "Adjust By Last Pay" check box only appears in a One-Off Pay. The reason for this is that it can be used in correction pays, often a purpose for One-Off Pays. The "Adjust By Last Pay" option is most commonly used when earnings were not paid in the Current Pay and a One Off Pay is being done to pay the employee the missing figures.
When the option is ticked, the software takes the Gross Taxable Earnings of this One Off Pay PLUS the last Current Pay, adding them together.
The software then calculates the correct tax on the combined figure.
Once this calculation is done, the software then SUBTRACTS the Current Pay's tax from the calculated Combined Pay's tax and the remaining figure becomes the One-Off Pay's tax amount.
Disclaimer: This information is of a generic nature. For specific advice regarding your particular circumstances, please contact your Accountant, the Inland Revenue Department, New Zealand at Work, Australian Taxation Office or your IT Consultant as appropriate.