Employees - Tax (Aus)

Employees | Payroll | Payroll | Tax tab

Summary

The Tax tab stores an employee's personal tax information.

It is expected that the Tax tab be used to record the information provided on the latest copy of the Tax file number declaration.

These values determine the amount of tax the employee pays and they are often linked to national legislation.

Important: Based on Securities & Privacy Commission guidelines, you should set up most Security Profiles with Access Level = "View" for this tab page so they cannot see the Tax File Number, which is displayed only in Edit mode.

Fields

Tax File Number / ABN Number:

Whether this field asks for a TFN or ABN is determined by the employee's Contract type. If the Contract type = "External", you need to record the employee's ABN. For all other contract types you record the employee's TFN as per Question 1 of the TFN declaration.

To protect employee privacy, the tax number is displayed only in Edit mode. In View mode, this field displays Tax File Number = "Supplied" or "Not Supplied".

An employee has 28 days to provide a valid TFN to their employer. You can also enter the following temporary or alternative numbers:

000/000/000 - Employee has chosen not provide a TFN to their employer or they have not provided a TFN after 28 days.
111/111/111 - Employee is applying for a TFN, which would normally occur only when an employee started work in mid to late June and the ATO had not given them a TFN number yet.
Note: The 000/000/000 and 111/111/111 TFNs are displayed in View mode and Edit mode.
333/333/333 - An employee who is under eighteen, claims general exemption, and does not earn enough for tax to be deducted may be exempt from quoting a TFN.
444/444/444 - Employee is a pensioner who receives a Social Security or Service pension where an exemption from reporting a TFN is claimed.

Incorrect Tax File Numbers

In accordance with ATO requirements, PayGlobal records and reports incorrect TFNs provided by employees. If the ATO receives an invalid TFN, they use the following process:

The ATO sends a communication to the employer and the employee. As an employer, you need to record the date you received the ATO communication in the ATO correspondence date field.
After the employee receives the ATO communication, they have 14 days to provide their employer with the correct TFN. PayGlobal uses the ATO correspondence date to determine when the employee's 14 days end. During these 14 days, the employer withholds tax at the rate that would apply if the employee had provided a valid TFN.
If the employee does not provide their employer with a valid TFN, when you open a pay that contains the employee start date PayGlobal automatically changes the employee's Tax rate based on their residency status so they pay the highest marginal withholding tax rate. This information is displayed in the Open Pay audit log.

Tax rate*:

The tax rate code determines how the the employee's PAYG, medicare, medicare levy surcharge and Study and Training Support Loan deductions are calculated. You can select from following options:

1, 2, 3, 4, 5, 6, A, B, H, L1, L2, L3, L1 F, L2 F, L3 F, L1 H, L2 H, L3 H , SWP and W.

PayGlobal will validate the selection against the other fields on this tab as well as the employee's age and Visas.

Note: You would leave this field blank if you were deducting tax by a fixed percentage. Tax rates 7, 11, 12, and S are no longer available.

For some tax rates, if the employee has Resident = "No" and Tax File Number = "000/000/000", then the following message appears:
"Employee is a Non Resident without a Tax Number. Tax rate has been changed to 4".
If the employee has Resident = "No" and a valid Tax File Number, then the following message appears (unless the non-resident employee has a tax rate of H or W):
"Employee is a Non Resident. Tax rate has been changed to 3".

Important: You cannot use options A and B for actors and entertainers who are paid by performance.

Closely held payee

This field is used for in STP reporting. It is used to report the employee's Income Type as "CHP"

Only Payers with less than 20 current employees are expected to use this field. And for those payers, this field should only be set to Yes if the employee is deemed to be a "Closely Held Payee".

For example:

family members of a family business
directors or shareholders of a company
beneficiaries of a trust

For “Payers” with 20 or more employees any “Closely Held Payee” is expected to be reported as Income Type “SAW”, so please ensure this new field remains set as “No”.

Inbound assignee

If your organisation has employees defined as an Inbound Assignees to Australia (IAA) you must set this field to “Yes”.

An inbound assignee is an individual that:

is employed by an offshore entity – for example, an entity that is non-resident for Australian taxation purposes
is seconded to Australia
has all, or part, of their base salary and other remuneration paid by an offshore entity
is maintained in Australia using a 'shadow payroll arrangement'. This is a notional payroll for the purposes of:

paying tax and social security obligations
applying internal tax equalisation and protection policies.
Note: IAA employees can only be assigned the following Tax Rates 1 - 6, A, B. Any other select tax rate will trigger a warning on saving the employee record and an error in process pay.

Prior tax country

This is field is mandatory for employees with an Income Type of Inbound Assignee to Australia (IAA) or Working Holiday Maker (WHM).

For all other employees this field will be disabled and remain empty.

• For IAA employees you must select the country they were a tax resident of before coming to Australia

• For WHM employees you must select their “home” country

PayGlobal will trigger a warning on saving the employee record and an error in process pay if this field is empty and the employee has an income type of IAA or WHM.

Dependant rebate*:

Select "Yes" if the employee is entitled to a tax rebate through lower PAYE tax reductions. For example, Spouse with dependent child/student, Spouse with no dependent child/student, Sole parent, Parent or parent-in-law, Invalid relative.

Zone rebate*:

Employees who live in remote areas of Australia for a period of more than 183 days in a financial year are entitled to a rebate. Select A, B or S based on the distance from the nearest large town. Leave this field blank if the employee is not entitled to a zone rebate.

For more information see https://www.ato.gov.au/Forms/Withholding-declaration---calculating-your-tax-offset/?page=3

Total rebates:

Enter the total value of all dependant rebate and zone rebate amounts. These amounts must be the annual values set by the ATO.

The value in this field is reported in STP as "Tax Offset Amount".

STSL debt*:

When this field is set to "Yes", PayGlobal deducts Student Training and Support Loan (STSL) from the employee's taxable income as per the PAYG Withholding tables issued by the ATO for tax year in process.

You must set this field according to the value the employee specified on Q10 "Do you have a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or Trade Support Loan (TSL) debt of their Tax File Declaration (or as directed by the ATO).

Tax override:

Enabled when Tax rate is blank. Specify the fixed rate of taxation for this employee.

Payment summary printed:

This field is no longer used.

Payment Summaries were replaced by STP in July 2018. If an employee is to excluded from STP reporting the employee must be linked to a Contract that has Include in online tax reporting = No.

TFN for Super Authorised:

This field controls whether the employee's TFN is included in superannuation reporting.

For all employees who started on/after 1 July 2007 it is compulsory for the employee's TFN to be reported to the superannuation fund.

Only employees that started before 1 July 2007 are allowed to have this field set to No.

Note: This field is disabled when TFN for Super Authorised = "Yes".

Residency status:

For TFN Declarations provided using NAT 3092-09.2017 set based on the answer given to Question 7.

For TFN Declarations provided using NAT 3092-07.2019 set based on the answer given to Question 8.

Resident - Employee is a resident of Australia for tax purposes.
Non-resident - Employee is a foreign resident for tax purposes. PayGlobal automatically change the employee's Tax rate to 3. This option is reported to ATO as "Foreign resident"
Working Holiday Maker - Employee is a working holiday maker with a valid working holiday maker visa. PayGlobal automatically changes the employee's tax rate to W.

Date declaration signed:

Only complete this field if you have been provided with a signed TFN Declaration.

If this field is populated, PayGlobal will report TFN Declaration/Onboarding data to the ATO via STP or the old PGPRTAXA026 series reports.

ATO correspondence date:

Note: Leave this field blank if no correspondence received, as setting this field will invalidate the employee TFN 14 days after the date set.

If the ATO receives an invalid TFN, they send a communication to the employer and the employee. As an employer, you need to record the date you received the ATO communication in the ATO correspondence date field. After the employee receives the ATO communication, they have 14 days to provide their employer with the correct TFN. PayGlobal uses the ATO correspondence date to determine when the employee's 14 days end.

Claims tax-free threshold:

For TFN Declarations provided using NAT 3092-09.2017 set based on the answer given to Question 8.

For TFN Declarations provided using NAT 3092-07.2019 set based on the answer given to Question 9.

Note: Only Australian residents can claim the tax-free threshold.

Note: Fields marked with an asterisk will be be disabled for editing if the employee is enabled for fully featured workforce management integration. These fields are sourced from workforce management.


Employees under 18		The following table shows the best practice combinations of Tax File Number and Tax rate values that will correctly tax employees under 18.
Provided TFN	Provided TFN Declaration Form		Claimed U18 exemption on TFN declaration	Resident	Taxation Rule	Tax File Number in PayGlobal	Tax rate in PayGlobal
No	Yes		Yes	Yes	Zero tax up to $350 per week gross earnings. If the gross earnings for a pay exceeds this value, the whole pay is taxed at 46.5%	333/333/333	4
No	Yes		No	Yes	Whole pay is taxed at 46.5% (equivalent to Tax Scale 4).	000/000/000	4
No	No		N/A	Yes	Whole pay is taxed at 46.5% (equivalent to Tax Scale 4).	000/000/000	4
No	N/A		N/A	No	Whole pay is taxed at 45% (equivalent to Tax Scale 4 - foreign residents)	000/000/000	4
Yes	Yes		N/A	Yes	Pay is taxed according to the tax scale assigned to the employee based on the declaration form	Any valid TFN	Desired tax scale
Yes	Yes		N/A	No	Pay is taxed according to Tax Scale 3	Any valid TFN	3