Tax Free Thrshold

Contributing Cover User Cazza
5 Posts
Contributing Cover User
Australia
Solved: Go to Solution

Tax Free Thrshold

HI,

I have a casual employee who is claiming the Tax Free Threshold as he works minimal hours . However last pay he filled in extra hours (a once off ) and earned $546.24 Gross. $47 PAYG witholding automatically dedected regardless of the Tax Free Threshold. Will you please advise as to why he was taxed?

Thanks

6 REPLIES
MYOB Moderator Steven_M
18,845 Posts
MYOB Moderator
New Zealand

Re: Tax Free Thrshold

Hi @Cazza

 

Using the ATO website tax withheld calculator and the values of a weekly employee who has the tax table of tax free threshold earning $546 will have the PAYG Withholding value of $47

Attachment2.PNG

 

 

As you can see AccountRight (2017.1.1 running 01/07/2017 tax tables)  will correctly show the necessary PAYG value.

 

Attachment.PNG

 


Kind Regards,
Steven
MYOB Client Support
Contributing Cover User Cazza
5 Posts
Contributing Cover User
Australia

Re: Tax Free Thrshold

Thanks Steven.

The employee is thinking that because he isn't going to earn over $18,200 being the tax free threshold that tax shouldn't be calculated and deducted.

Is myob assuming that this particular gross pay is based on an annual income?

 

MYOB Moderator Steven_M
18,845 Posts
MYOB Moderator
New Zealand

Re: Tax Free Thrshold

Hi @Cazza

 

AccountRight will look at each individual to calculate PAYG Withholding. It will NOT look at the employee's pay and tax history to calculate the PAYG Withholding for that individual pay.

In short, the system looks at the tax table the employee is on and then uses the calculations for that tax table to determine the value. The calculations can be seen in the Payroll>>Payroll Categories>>Taxes - for the respected tax tables.

 


Kind Regards,
Steven
MYOB Client Support
Ultimate User gavin12345
1,348 Posts
Ultimate User
Australia
Accepted Solution Solved Solution

Re: Tax Free Thrshold

Hi @Cazza

 

Not sure if @Steven_M answered your employee's question or not. As per the ATO, the $18k threshold is an annual threshold, which equates to about $350 per week. If an employee is paid weekly, then the first $350 is not taxed, however anything above that is. As an employer this is how you are to deduct tax from that employee, based on the ATO weekly tax tables, or those in MYOB. You can't make assumptions about the employee's income from other sources, nor how much he/she will earn during the remainder of the year.

 

At the end of the year, when all the employees income is determined, any excess tax deducted will be refunded by the ATO.

 

Regards

Gavin

Contributing Cover User Cazza
5 Posts
Contributing Cover User
Australia

Re: Tax Free Thrshold

Thanks Gavin for the extra information. 

This clarifies the matter for me.

Contributing Cover User Cazza
5 Posts
Contributing Cover User
Australia

Re: Tax Free Thrshold

Thanks Steven.

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