PAYG
Introduction
The implementation of the National Tax Reform impacts on DEECD and its schools not only through the introduction of the GST, but also the introduction of Pay As You Go (PAYG).
PAYG is a single, integrated system for reporting and paying withholding amounts and tax on business and investment income. It replaces 11 existing systems, including provisional tax, the company and superannuation fund system, and Pay As You Earn (PAYE) or 'group' tax.
When a salary overpayment is repaid within the same financial year as it occurred, the amount to be repaid excludes PAYG tax. However, if the overpayment is repaid in a subsequent financial year, it is a requirement of the Australian Tax Office ( ATO) that the Department recover the gross amount, including PAYG tax.
Where the gross amount is required it is then up to the employee to seek a refund of the PAYG tax paid on the overpayment from the ATO by requesting a reassessment of his or her tax return for the year in which the overpayment occurred. It is therefore advantageous to an employee who has been overpaid to repay any outstanding amount before the end of the financial year in which it occurred.
With this in mind, principals are encouraged to negotiate and activate (for recovery in accordance with Section 56 of the Financial Management Act) any outstanding overpayments for the current financial year. Outstanding overpayments can be identified through the Over/underpayment Summary Report which should be reviewed on at least a weekly basis. The report can be run on HRMS from 'Compensate Employees> Manage Payroll Process>Rpt E-O'.
About PAYG
GST Bulletin No. 7 Circular 23/2000 outlines PAYG implications for schools and colleges, whilst also providing a broad outline of the new PAYG system.
Circular 163/2000 Pay As You Go issues also outlines the further changes to tax administration which occurred as a result of the new PAYG tax withholding system and deals with some of the issues relating to PAYG, which have since been resolved.
The Loddon Mallee Region have issued a useful spreadsheet PAYG calculator that assists schools to determine PAYG amounts. See here for the PAYG calculator (Excel - 41Kb).
Principals and business managers should note the following requirements in the above bulletins:
- Victorian Government policy stipulates that as a general rule, from 1 July 2000, Victorian Government entities will only deal with suppliers who have an ABN.
- PAYG Voluntary Withholding
- No ABN PAYG Withholding
Further information may be obtained from the Network Leaders for your schools network in each region.
If you are required to register please contact the Tax Compliance Unit prior to such registration. When agreement is reached that this is appropriate you should complete linked registration form.
PAYG payment summaries for local payroll
Schools in transition from CASES to CASES21, where the PAYG year ending 30 June occurs, must complete this form where the media contains payment summary annual report details (ie CASES and CASES21) for more than one payer.
Where this form is completed it must be supplied with the Magnetic media information (EA) form. See the PAYG Withholding Where ABN Not Quoted Annual Report (PDF - 37Kb).
- Payment Summary Information Report (PDF - 55Kb) - form EA Local payroll
- Magnetic Media – Multiple Files - Payment Summary Annual Reports (PDF - 55Kb) - form EA Local Payroll Multiple Media
CDEP Calculator
The Community Development Employment Program (CDEP) calculator is a tool developed by DEECD to assist schools to readily determine the CDEP Reduction amount for offsetting PAYG deducted from CDEP employees, where they receive other (i.e. Non CDEP) wages from the school .
The CDEP Calculator Spreadsheet enables schools to easily enter the CDEP employees gross salary, CDEP wage and Non CDEP wage and readily provide the school with a reduction amount.