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Payroll and PAYG tax

Aileen_6300

Hi there, I have an employee who selected tax free threshold + STSL on their TFN Declaration form. This was appropriately set in MYOB however, at the end of the year she received a big tax bill. She believes the same will happen again this year as she has just checked her Student loan and there has been no payments to it.

It was my understanding that the Student loan payment is automatically calculated in MYOB and added to the PAYG amount, as they reach a certain threshold - have I got that wrong? Not sure what that threshold would be but this staff member is working full time so surely it would have kicked in by now, plus, if she's getting a bill then surely it should have been deducted as the year went along. Have I missed something? Is it possible that it's set up incorrectly?

I would very much appreciate if someone could advise.

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gavin12345

Hi @Aileen_6300

Provided you have set the correct tax table on the employee's card (just above the Extra Tax field), MYOB will deduct tax for the student loan provided her income level is high enough (approx $47k per annum). If you have set Extra Tax this will be added to the calculation. There is nothing more you need to do.

There are many reasons why someone gets a tax bill, for example she might have other earnings such as interest or dividends or other income that is not taxed. All you can do is ensure you have set things up correctly and that MYOB is deducting the correct amount. There are printed tax tables available from the ATO as well as online calculators which show you how much should be deducted. If MYOB is not deducting the correct amount then you have something setup incorrectly, for example you might not be taxing an allowance by treating it as exempt from PAYG.

So check the MYOB calculation again the ATO tax tables for employees with Student loans. The MYOB calculation should be higher due to the Extra Tax setting.

Regards

Gavin

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Aileen_6300

Thank you @Sam_R the reports look good to me.

Is the tax as in PAYG (calculated via the tax table for Tax Free at Student debt rate) dealt with completely by the ATO or do I need to do something this end for that to go against their student debt? This same employee also has extra tax taken out to also go against the debt. I just have it set up as Extra Tax per pay period (last option on the Tax tab in the employee file) - am I supposed to do something else with this? I'm assuming the extra tax gets factored into the Tax that is automatically calculated in their standard pay. Is this correct, or am I supposed to be doing something extra with this also? Clutching at straws her to try and work out why she's getting the tax bill.

Sam_R

Hi @Aileen_6300,

If this tax table has been selected in the employee's card file, the software will automatically calculate the amounts accordingly. However, you do want to make sure this employee's payroll data is being sent to the ATO with the appropriate reporting categories and amounts. I would advise checking your payroll reports against your STP reports to ensure this information is flowing through accordingly.

In addition, I would advise your employee to speak with their accountant or the ATO directly as they may be able to shed a better light on this.

Do let me know if there's anything further I can assist with.