Description
A new field labelled Registered WHM Employer has been added to the PAYG Tax Details section of the Payroll > Payee > Payee Entry screen for payees who have a tax status of Working Holiday Maker.
When the Registered WHM Employer field is ticked, it indicates that your business has registered as an employer of Working Holiday Makers (WHMs) and therefore tax can be withheld from WHM earnings at the WHM rates as opposed to foreign resident rates.
The Registered WHM Employer field is highlighted in the example below.
When the Registered WHM Employer field is ticked the following applies:
if the payee has provided a tax file number (TFN) or has a TFN application in process, the payee will be automatically taxed at WHM rates
if the payee has not provided a TFN (i.e. the existing No TFN Reason field is set to Declined TFN Number Declaration) then the payee will be automatically taxed at foreign resident - no TFN rates (i.e. according to tax scale 4b).
When the Registered WHM Employer field is not ticked the following applies:
if the payee has provided a tax file number (TFN) or has a TFN application in process, the payee will be automatically taxed at foreign resident rates (i.e. according to tax scale 3)
if the payee has not provided a TFN (i.e. the existing No TFN Reason field is set to Declined TFN Number Declaration) then the payee will be automatically taxed at foreign resident - no TFN rates (i.e. according to tax scale 4b).
Benefits
This enhancement ensures that WHMs are taxed according to ATO requirements whereby WHM tax rates must only be applied if the employer is registered to employ WHM and the payee has provided a TFN. Otherwise, if an employer is not registered to employ WHMs then tax must be withheld at foreign resident rates.
Under Single Touch Payroll (STP) Phase 2 reporting it will be mandatory for an employer to report if they are a registered WHM employer when reporting WHM payees to the ATO. Therefore, this enhancement also allows you to configure Payee records accordingly in preparation for STP Phase 2 reporting.
STP Phase 2 reporting capability will be added to FastTrack360 in a future release towards the end of 2022.
Configuration
On upgrade the Registered WHM Employer field will be ticked on by default for all existing and any new Payee record where the tax status is set to Working Holiday Maker.
If you employ payees who are working in Australia under a 417 or 462 visa sub-class but your business is not registered to employ WHMs, you must un-tick the Registered WHM Employer field on all Payee records where the payee’s tax status is set to Working Holiday Maker. Because the Registered WHM Employer field is subject to payee validity and is locked down once a validity period has been used in a pay batch, you may need to add a new validity period to a Payee record before you can un-tick the Registered WHM Employer field.