Payee Tax Conditions (Australia)

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Tax File Number

If it is known this must be entered. It will be printed on all reports that notify this payee's details to the ATO. If you do not enter the Tax File Number, you are required by the ATO to deduct tax at the scale 4A or 4B rate.

There are some fixed codes to use when a tax file number is not quoted or is invalid:

000000000: no TFN quoted by empoyee - employee chose not to or failed to quote one within 28 days
111111111: employee applying for TFN at the time payment summaries are produced (i.e.started work mid to late June and not yet received TFN from ATO)
333333333: employee under 18, and earns less than the current limit ($112 per week in 2000)
444444444: employee is a pensioner, or recipient of a social security or service pension or a benefit (other than New Start or Job Search Allowance or Sickness benefits, etc) and has claimed an exemption from quoting a TFN.
987654321: employee quoted a TFN containing an alphabetic character, or the TFN quoted is too long for the data entry screen.

Tax Scale

All the standard codes are supplied. A new employee will have a default tax code of 1, but if you do not know the payee's Tax File Number, you should select 4A or 4B.

If you wish to make irregular payments to the employee, you may prefer to calculate tax using a method that spreads the PAYG more fairly for the employee. In this case, select a tax scale of 0, and in the Pay Calculation screen add a PAYG deduction and enter the cash amount to be deducted as PAYG tax.

ABN

This is only required if the system is being used to pay sub contractors specified payments. The ABN will be reported in the payment summary file you can generate at year end.

Medicare Levy Adjustment

Use this option to select an adjustment to the automatic calculation of Medicare levy for this employee. This would only be selected if you have received a Medicare Levy Variation Declaration from the employee.

Select the option appropriate to the answers given by the employee in the declaration.

Number of Children

This should only be selected if the employee is claiming a dependant child rebate. You must have received an Employment Declaration from the employee, and the employee's response to question 12 was YES.

Dependant Rebate

The dollar amount of any dependant rebate is entered. You must have received an Employment Declaration from the employee with section 'Rebates and Family Tax Assistance' completed.

You must verify the amount claimed to ensure it does not exceed current rates.

Zone Rebate

The zone rebate should be set to the Zone for which the employee is claiming a rebate. You must have received an Employment Declaration from the employee with section 'Rebates and Family Tax Assistance' completed. You must verify the amount claimed to ensure it does not exceed current rates.

HECS Deduction

If you have received an Employment Declaration from the employee and they answered YES to the HECS question, select this option on the Payee, Tax Conditions screen.

If the employee has an SFSS debt, this is where you specify that an SFSS deduction is required.

Tax Rate

This will only contain a value if you have received an order from the ATO for this payee or the employee has requested tax to be deducted at a higher rate than normal. A rate entered here will be applied to the total of the payee's taxable pay. It will over-ride the calculation specified by the payee's tax scale.

Percent Tax Rate

The percent of normal tax on the Payee, Tax Conditions screen allows you to specify that a proportion of the calculated PAYE tax is to be deducted. The percentage rate can be above 100, if the employee want to pay tax at a higher rate than normal.

Payee Payroll Tax State

Select the state for which payroll tax will be payable for this employee.

Payee Tax Category

The tax category can be set to 'Employee' (the default), Labour hire, Voluntary Agreement, Personal Service, Specified Payments, or Sub Contractor. The tax category specifies the type of payment summary to be produced at year end.