Description
A payee can submit a Medicare levy variation declaration to request that their employer withholds an additional amount of tax from their earnings to cover their Medicare levy surcharge (MLS) liability. This prevents the payee from potentially having to pay more tax at the end of the financial year to cover the Medicare levy surcharge.
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We have also provided additional search options to allow you to find payees that have the Medicare Levy Surcharge option applied via the Payroll > Payee > Search > Payroll Details screen. When the option in the Tax Scale field is set to Tax Scale 1 or Tax Scale 2, an MLS filter option is enabled as shown in the example below.
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Benefits
If a payee is subject to an MLS and their tax withholding is being manually adjusted to account for the surcharge, this enhancement allows the relevant tax treatment to be reported to the ATO via STP Phase 2 to inform why the tax withholding is higher than what it otherwise would be.
Click here for more information about reporting tax treatment codes in STP Phase 2.
Configuration
On upgrade to V12.17, the Medicare Levy Surcharge option is available and can be enabled in the PAYG Tax Details section of the Payroll > Payee > Payee Entry screen if the payee’s tax scale is set to Tax Scale 1 or 2 and they are not claiming a Medicare levy adjustment (reduction), low income tax offset or a Seniors and Pensioners tax offset.
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