Extra Emoluments are lump sum payments made to an employee and include bonuses, commissions, backpay, retiring or redundancy payments.

The IRD specifies a very complicated formula for the taxing of these lump sum payments. The purpose of the extra emolument procedure in Ace Payroll is to automate the tax calculation according to this formula.

For extra emoluments, your employee can elect to be taxed at the higher rate of 33%, or alternatively if the employee's annualised gross pay is less than $38,000 based on their last four weeks earnings they are taxed at 21%.

Earner premium is added to the above deductions unless the extra emolument is a retiring or redundancy payment in which case no earner premium is payable.

Don't worry if the above sounds too complicated because all you have to do is enter the gross payment - Ace Payroll calculates the tax automatically.