2.3.1 Arrears 2. PAYG Lump sum payments on arrears of Processing salary or allowances should be Responsibilities treated as if the payment was being made as normal salaries i.e. tax instalments should be calculated at 2.1 Legal Obligations the rate that would have applied had Obligations to employees and other the payments been received weekly workers come from a variety of or fortnightly over the period to which sources federal, state/territory laws, – the arrears apply. industrial awards and agreements, tribunal decisions and contracts of The amount to withhold depends employment (whether they are written upon a number of factors including the or verbal). period relating to the arrears payment. The ATO has issued a publication to PAYG obligations as an employer are to: assist employers in working out the amount of tax to withhold for pay correct wages within the – payments of arrears and schools pay period should review a copy of this issue pay advice slips publication Withholding tax – ‘PAYG forward PAYG tax instalments to tables back payments including – the ATO lump sum payment in arrears’ make appropriate payment under NAT3348, if they make payments of the Superannuation Guarantee arrears. Legislation report SGL payments to Such payments should be recorded employees on the employees Payment Summary and a letter explaining the arrears 2.2 Pay As You Go payment and taxing should be given Withholding to the employee for their use in negotiating their taxation liability with Schools will need to understand and apply the PAYG Withholding the ATO. requirements to all locally paid staff and contract personnel. The Pay As You Go Withholding (PAYGW) system requires employers to withhold certain amounts from salary and wages each pay period, as supported by the TFN employee’s declaration and remit these amounts to the ATO through the BAS. 2.3 PAYG Withholding Tax Tables The current PAYG Withholding Tax Tables should be used to ensure the correct rate of tax is being withheld. These rates can be located and printed from the ATO website or alternately schools can access the online version of the tax withheld calculator also available from the ATO website.
2. PAYG Processing Responsibilities 2.1 Legal Obligations Obligations to employees and other workers come from a variety of sources – federal, state/territory laws, industrial awards and agreements, tribunal decisions and contracts of employment (whether they are written or verbal). PAYG obligations as an employer are to: pay correct wages – within the pay period issue pay advice slips forward PAYG tax instalments to the ATO make appropriate payment under the Superannuation Guarantee Legislation report SGL payments to employees 2.2 Pay As You Go Withholding Schools will need to understand and apply the PAYG Withholding requirements to all locally paid staff and contract personnel. The Pay As You Go Withholding (PAYGW) system requires employers to withhold certain amounts from salary and wages each pay period, as supported by the employee’s TFN declaration and remit these amounts to the ATO through the BAS. 2.3 PAYG Withholding Tax Tables The current PAYG Withholding Tax Tables should be used to ensure the correct rate of tax is being withheld. These rates can be located and printed from the ATO website or alternately schools can access the online version of the tax withheld calculator also available from the ATO website. 2.3.1 Arrears Lump sum payments on arrears of salary or allowances should be treated as if the payment was being made as normal salaries i.e. tax instalments should be calculated at the rate that would have applied had the payments been received weekly or fortnightly over the period to which the arrears apply. The amount to withhold depends upon a number of factors including the period relating to the arrears payment. The ATO has issued a publication to assist employers in working out the amount of tax to withhold for payments of arrears and schools should review a copy of this publication – ‘PAYG Withholding tax tables – back payments including lump sum payment in arrears’ NAT3348, if they make payments of arrears. Such payments should be recorded on the employees Payment Summary and a letter explaining the arrears payment and taxing should be given to the employee for their use in negotiating their taxation liability with the ATO.
Finance%20School%20Level%20Payroll%20Requirements%20v5_1.docx