How to manually create a tax scale with a fixed withholding amount

KB145

Overview

Sometimes it is necessary to create a special tax scale just for one employee who has an ATO-approved varied withholding rate.

Process

  1. Go to Payroll > Setup > Tax scales
  2. Select New
  3. Enter the Tax scale code and Effective to date
  4. Select the correct Category and Option
  5. Add the tax scale values
    • Add a weekly earnings amount - This amount should be above the possible weekly earnings for the employee. If an employee earns an amount over the weekly earnings amount entered, tax will only be calculated to the weekly earnings amount and the remaining income will be untaxed. (Example - if the employee's weekly wage will never go over $10,000, adding this amount as the weekly earnings amount will mean the employee's pay will be fully taxed)
    • In the A column, enter the percentage of withholding as a decimal e.g. 40% is 0.4
    • In the B column, enter 0
  6. Update
  7. Assign the new tax scale to the employee

Tax is calculated using these scales as (Weekly earnings * A) – B

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Last edit 23/12/21