Tax Information

Tax Tables

The formulas and the figures used for calculating tax are supplied by the ATO. This document is not intended to give figures or formulas for calculating tax, but it does give information on how Preceda handles the different taxation requirements.

The Preceda Payroll Reference Tables contains the majority of figures required by the calculation formulas for taxation. Each employee has codes and some figures which determine the amount of tax calculated.

The Formulas supplied by the ATO are based on weeks. Therefore, regardless of the pay frequency, Preceda calculates the employee's pay frequency such as monthly paid employee has their pay divided by 4.3333 to calculate the tax.

There are currently eight tax codes operative in Australia. An additional code is used to stop any normal tax from being calculated. The Tax Codes are numbered from 0 to 7. The figures used along with the codes are stored in the Tax Tables window. Each employee must have a Tax Code specified in their Tax Information window.

Code Description
A Senior Single
B Senior Illness Separated
C Senior Member of a Couple
H Working Holiday Maker (WHM)
0 No Tax Deducted
1 Exemption NOT Claimed
2 Exemption Claimed
3 Non-Resident
4 Tax File Number not provided
5 No medicare levy
6 Half medicare levy
7 Exemption claimed (no A/L loading)

 

Special Tax Rates and Concessions

Preceda provides for a special tax percentage rate in lieu of the tax codes. The special tax rate entered is a Flat Tax rate. The ATO issues the rates to employees who can justify the special rate. These employees would normally be those who have negative geared investments.

An Allowance/Deduction code is setup with a Classification of 5 - Living Away Allowance and assigned to the employees by using the Salary window along with the amount of the allowance.

 

An Allowance/Deduction code is setup with a Classification of 6 - Meals/Board, and an Allowance/Deduction code is setup with a Classification of 7 - Quarters.

Both Allowance/Deduction codes are then assigned to the employee using the Salary window along with the amount of the allowances.

 

Under the current taxation rules an employee may earn up to $320 of leave loading without paying tax and only at the time of receiving the leave. The tax free limit of $320 is defined in the Dependant Rebates. If an employee is to be taxed leave loading in full, the amount allocated in the Dependant Rebates should be removed. The Leave Loading amounts paid to employees are stored in their YTD Gross Tax Net window and is reset at Year End.

 

The annual dependant concession amounts claimed by an employee must be entered in the employee's Tax Information window as concession amounts can vary for employees. Codes, Rates or Values are not stored in Preceda.

 

An additional rebate is available to those who claim general exemption and who are paid in a specified, remote area/zone. One of the following Zone Codes is entered against the employee in the Tax Information window.

Code Description
A Zone A
B Zone B
C Special Zone A
D Special Zone B
  • The Zone allowance values are held in the Tax Zones window

 

An Allowance/Deduction code is setup with a Classification of E - Extra Tax.

For each employee claiming a Medicare Levy Adjustment, the adjustment is calculated manually and the Medicare Levy Adjustment Allowance/Deduction code is assigned to the employee in the Salary window with the calculated adjustment amount as a negative, to be applied each pay period.

  • Preceda applies the adjustment automatically each pay.

 

Payments for Unused Annual and Long Service Leave

Termination payments for unused annual leave and long service leave are handled by using an Allowance/Deduction code. Allowance/Deduction codes are setup for the following:

  • Classification of A - Lump Sum A
  • Classification of B - Lump Sum B
  • Classification of G - Unused Leave Post August 1993
  • Classification of H - Tax on Unused Post August 1993.

Refer to the ATO Guide to Employers Publication for information about lump sum termination payments.

  • The Termination Pay window is used to calculate the Lump Sum A, Lump Sum B and Post August 1993 components of unused leave.

 

An Allowance/Deduction code is setup with a Classification of C - Lump Sum C Eligible Termination and another with Classification of D.

An Employment Termination Payment Summary is automatically produced for any employee who have an Employment Termination Payment in their YTD Figures and the relevant details have been entered into the Employment Termination Payment window.

For the tax exemption component of Bonafide Redundancies and Approved Early Retirements Lump Sum D, an Allowance/Deductions code is setup with a Classification of Lump Sum D.

Lump Sum D is calculated manually and recorded in the Time Entry window when processing a termination payment.

 

An Allowance/Deduction code is setup for Extra Tax with a Classification of E - Tax. An E is also entered into the Supplementary Tax field. The Allowance/Deduction code is assigned to employees who have nominated to pay extra tax by using the Salary window with the amount of extra tax to be deducted each pay period. The extra tax calculated is added to the employee's normal calculated tax amount.

The extra tax is displayed as a separate figure on the employee's pay slip.

 

An Allow/Deduct code is setup for STSL with a Classification of E and Supplementary Tax of B (STSL - Study & Training Support Loans).

The Supplementary Tax field needs to be set to B (STSL - Study & Training Support Loans) on the Tax Information window.

Records with a default Unit = 0 and a default Amount = 0 will be added the first time the payroll is calculated and updated.

When the payroll is run, the STSL is calculated and deducted using the T and W Tax Tables.

In addition to the calculated values, the following can be performed:

  1. Change the employee record for the STSL so that the Unit = 1 and the Amount = a specified amount. This will result in the extra standard amount being deducted in addition to the value calculated according to the Supplementary Tax Tables.
  2. If an additional amount was entered and a value was entered during Timecard Entry, the value entered during the Timecard Entry will be used in addition to the value calculated according to the Supplementary Tax Tables. The value held on the employees record will be overridden.
  3. If an amount has been added as in point 1 and a value is entered during Timecard Entry as described in point 2. Preceda will use the value entered during Timecard Entry in addition to the value calculated according to the Supplementary Tax Tables. The value held on the Employee's records will be overridden.

Example:

Weekly Gross Earnings Calculation Using STSL Rate Employee Standard A/D STSL Code Time Entry Resulting Total STSL
$1,100 .020 = $22 Unit = 0

Amount = 0		 None $22.00
Calculated STSL only
$1,100 .020 = $22 Unit = 1

Amount = $40		 None $62.00
Calculated STSL plus Standard employee record amount
$1,100 .020 = $22 Unit = 1

Amount = $40		 $20 $42.00
Calculated STSL plus Time entry value (override standard A/D)
$1,100 .020 = $22 Unit = 0

Amount = 0		 $20 $42.00
Calculated STSL plus Time entry value

 

The YTD amount will automatically display in the employee records using the A/D codes setup and the STSL amount is reported as a separate item on the employee's pay slip.

Prepayments and Rebanks allow for the entry of STSL deduction codes. Specific values for these tax elements can be specified against the Allowance/Deduction code. The value for Total Tax includes the value of the Supplementary Tax.

For some employees, the withholding limit may result in their withholding not being sufficient to cover their end-of-year tax liability, as their total earnings for the financial year may exceed the study and training support loan repayment threshold or attract a higher rate of tax. Under these circumstances, your employee can arrange an upwards variation by entering into an agreement with you to vary the rate or amount of withholding.