Taxation

General

The information provided here is general information only to assist principals, managers and employees in matters relating to the payment of income tax.  The information provided here in relation to employee/employer taxation obligations applies to those employed on the Department’s central payroll system including School Local Payroll (SLP) on eduPay employees.

For comprehensive taxation information, particularly concerning an individual’s tax situation, refer to the Australian Taxation Office (ATO) web site at http://www.ato.gov.au

Tax is deducted from all payments made on the payroll in accordance with ATO guidelines and the information provided by the employee on their Tax File Number Declaration and/or Withholding Declaration.

The ATO provides tax instalment schedules and an online Tax Instalment Calculator that can be used to determine the tax to be deducted from fortnightly salary payments. The schedules and the calculator are available on the ATO web site (refer to 'Other Resources' below).

Tax File Number Declaration

An employee is required to provide a Tax File Number (TFN) Declaration form in the following circumstances:

  • Commencement of employment,
  • After any break in employment
  • Where taxation details change

Information provided on the TFN Declaration and the Withholding Declaration is used to determine the tax to be deducted from salary payments.

The TFN Declaration form is available electronically on the ATO website or from selected Newsagents.

Where a tax file number is not provided on the TFN declaration form, tax is required to be deducted at the highest marginal tax rate.

The declaration form is not forwarded to the ATO for employees paid on central payroll as this information is electronically conveyed to the ATO on a regular basis. The processed form should be retained in a secure location but NOT on the employee's personnel file.

For further information regarding taxation requirements refer to the Tax File Number Declaration page on the ATO website (link below) and the instructions on the TFN declaration form.

Tax File Numbers are confidential.  Access to an employee's tax file number must be restricted to those employees undertaking relevant payroll actions.  Taxation and privacy legislation provides for severe penalties for the misuse of a TFN.

Tax-free threshold

An employee can only claim the tax-free threshold with one employer. This is usually the employer who pays them the most salary.

Withholding Declarations

A Withholding Declaration can only be provided after a TFN Declaration has been lodged with the employer.

A Withholding Declaration may be required in the following circumstances:

  • To adjust the amount withheld from salary
  • To advise of a change to information previously provided in a TFN Declaration.

Declarations for school based staff are processed in the school. Staff in non-school locations should forward their declarations to Corporate People Services for processing.

Higher Education Loan Schemes (HELP and SFSS)

An employee with a Higher Education Loan Program (HELP) or Student Financial Supplement Scheme (SFSS) debt must indicate on the TFN Declaration that they have this debt.  The payroll system will automatically calculate tax deductions each fortnight in order to repay this debt.  An employee who wishes to make additional payments to meet their HELP or SFSS debt should make extra payments directly to the ATO.

Rebates

A rebate can only be claimed on a TFN Declaration form where the employee is claiming the tax-free threshold. A rebate reduces the amount of tax an employee is required to pay. A withholding declaration is also required when claiming these rebates.  For more information regarding available rebates and eligibility contact the ATO.

Variation to the PAYG withholding amount deducted

Full details on variations can be found on the ATO website.  For employees on the central payroll, any notice received from the ATO should be forwarded immediately to People Services.  When a centrally paid employee applies to the ATO for a variation the employer details must be shown as the Department of Education and Training..

An employee may request that additional tax be deducted from their salary.  This request must be in writing and remains in force until the employee withdraws the request in writing.  An employee cannot request a reduced taxation rate other than by claiming an appropriate rebate approved by the ATO. 

For school based employees an additional tax adjustment is completed at the school.

For Central and Regional based employees, forward the request to Corporate People Services - details available in the Contact Information link below.

Tax on arrears payments

The tax instalments deducted from a lump sum payment of salary or allowance arrears are calculated in accordance with the rules specified by the Australian Taxation Office.

All payments of salary, including allowances, are included in the PAYG payment summary for the financial year in which the income is received. This applies to payments of salary or allowance arrears, even if they include arrears for a period in a previous financial year.

Tax on payments of unused long service leave

Tax is levied on payments for unused long service leave for an employee who has ceased employment at the rates determined by the ATO.  Refer to the ATO website for the Tax table for unused leave payments on termination of employment.

Tax on Workers' Compensation payments

Lump sum payments of workers' compensation payments that are calculated at a weekly or other periodical rate are taxed in accordance with the rates set by the ATO.

Tax and payment of travel allowances (mileage)

It is an ATO requirement that where an employee is reimbursed for the use of a private motor vehicle (other than for transport or removal to a new location), the payment of the allowance is included on the employee’s PAYG Payment Summary.  As a result, claims for use of a private motor vehicle must be processed on the payroll for school-based employees and on ProcureNET (Ariba) for public service employees.

Where total kilometres reimbursed for an employee for the financial year are less than 5,000 kilometres, this will be shown separately on the employee’s Payment Summary in the allowances box, but is not subject to PAYG withholding.

Where total kilometres reimbursed for the financial year are in excess of 5,000 kilometres this will be shown separately on the employee’s Payment Summary in the allowances box but is subject to PAYG withholding for any distance travelled in excess of 5,000 kilometres.

Further information on tax and payment of travel allowances (mileage) is available from the ATO Vehicle and Travel expenses for individuals link under Direct links to specific ATO information below.

Other Resources

Procedures & Forms

  • Taxation Administration procedures (WORD

 Additional Information

Direct links to specific ATO information

Legislation

Related Topics

 

Contact Information