"Under 18 and below tax threshold" but 47% PAYG withheld
Two successive self-onboarded employees (both under 18, no TFN, not earning much) are having 47% tax withheld, which doesn't seem right. So, I'm hoping for some clarification.
Firstly, here is the 'Tax declaration details' section from the PDF snapshot of their self-onboarding responses:
__________________________________________
"Tax declaration details
Do you have a Tax file number?
No
Under 18 and below tax threshold
Are you an Australian resident for tax purposes or a working holiday maker?
Australian resident for tax purposes
Do you wish to claim the free tax threshold?
No
Do you have any of the following outstanding debts or loans?
No
On what basis are you paid?
Casual"
__________________________________________
Is it correct that MYOB is using the Tax Table "No Tax File Number Resident", causing 47% PAYG withholding (as shown in the attached redacted images)?
When I use the ATO Tax withheld calculator with their responses, it only withholds $18 from fortnightly $100 gross earnings.
Is there something that I need to change manually beyond what MYOB takes from the self-onboarding responses?
If the current MYOB setup is correct for their given responses, should the employees perhaps also have opted to claim the tax free threshold to prevent the 47% tax withholding (assuming they have no other employer/earnings)?
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Some notes from my research so far:
The employees DO NOT meet the following conditions from the ATO website (https://www.ato.gov.au/Business/PAYG-withholding/Payments-you-need-to-withhold-from/Payments-to-employees/Tax-file-number-and-withholding-declarations/) because, although they ARE under 18 and WILL only earn maximum $150 fortnightly and about $2000 annually, they HAVE provided a TFN declaration during self-onboarding:
"Employee is under 18 years old
"The amount you need to withhold from payments to the employee is nil if all of the following 3 conditions are satisfied:
- The individual is under 18 years of age.
- The individual has not provided you with a TFN declaration (NAT 3092).
- The amounts you pay to the individual don't exceed
- ...
- $700 where you pay the individual fortnightly
- ..."
Also, they DO NOT meet the following conditions from the ATO website (https://www.ato.gov.au/Rates/Fortnightly-tax-table/?page=2 ) because, although they have not quoted their TFN and have not advised they are applying for one, they HAVE claimed an exemption from quoting their TFN:
"When a TFN has not been provided
"You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents), if all of the following apply:
- they have not quoted their TFN
- they have not claimed an exemption from quoting their TFN
- they have not advised you that they have applied for a TFN or have made an enquiry with us."