There are two scenarios where this may affect you as a weekly or fortnightly Payer.
- Some financial years, your pay period end dates fall such that you will find there are 27 rather than 26 fortnightly pays and 53 rather than 52 weekly pays.
- You may change your financial year boundaries as discussed in Preparation Section 1 resulting in an additional pay period end being captured in the next financial year.
The withholding weekly and fortnightly tax tables published by the ATO are based on the normal number of pays in a year (26 fortnights or 52 weeks). Tax rates increase as taxable incomes increase, therefore, an additional pay period in a financial year will mean that amounts withheld from salary and wage payments made to many payees will not cover the amount payable when they lodge their tax returns.
If the payees will receive an additional pay during the year, payers are encouraged to:
- Inform your payees about this issue, and
- Put processes in place so payees can request additional amounts be withheld, that is, using a tax adjustment in the employee file
Please refer to the ATO website for additional tax values https://www.ato.gov.au/rates/weekly-tax-table/
Employee Details > Payments > Tax > Adjustment
You will need to work out ahead of your first pay period in 2020/2021 if the above applies to your organisation based on your Wagemaster PPE dates and the actual EFT payment dates for the upcoming 2020/2021 financial year.