Support for Low Income Tax Offsets (AU Only)

Description

FastTrack360 from this release onward, provides automated support for applying low income tax offsets to reduce eligible payees' tax withholding.

To claim a low income tax offset, a payee can submit a Withholding Declaration form (NAT 3093) on which the payee will answer YES to Question 7 and will specify an estimated total tax offset amount. The estimated total tax offset amount is the maximum amount by which the payee's tax will be reduced over the course of a year. An example of Question 7 on the NAT 3093 is highlighted in the example below.

To allow tax offset details to be captured on a Payee record, a new field labelled Tax Offset Claimed has been added to the Payroll Australia > Payee > Payee Maintenance > Payee Entry > PAYG Tax Details screen. When the Tax Offset Claimed field is ticked, a secondary field labelled Offset Amount is enabled and allows the estimated total tax offset amount, as indicated by the payee on the NAT 3093 form, to be captured. An example of this is shown below.

The Tax tab of the Payee Pay Details screen, which is displayed when you double-click on a payee in the Pay Wizard or the Pay Enquiry screen in the Payroll Australia module, has been enhanced to show the amount by which a payee's tax withholding has been reduced in a pay batch if the payee is subject to a tax offset. This will allow payroll staff to determine if an offset has been applied, what the offset amount was and will allow reconciliation of a payee's tax total in a pay batch. An example of this is shown below.

The Tax Withholding Report in the Payroll Australia module has also been enhanced to show a tax offset amount so that payroll staff can report on tax offset amounts that have been applied to reduce payees' tax and to therefore allow reconciliation of payees' tax withholding amounts. An example of this is shown below.

For more information about how low income tax offsets work in FastTrack360, refer to the following topic in the online help: Support for Low Income Tax offsets.

Benefits

This enhancement provides support for applying a tax offset to a payee's tax withholding without the need to manually adjust the amount of tax that is withheld from the payee's earnings in each pay period.

Configuration

A low income tax offset can be applied to a Payee record by ticking the Tax Offset Claimed field and keying in the offset amount that the payee is claiming in the Offset Amount field on the PAYG Tax Details. For more information, see Updating the PAYG Tax Details.

If the current payee validity period has been used, a new validity period may need to be added to the Payee record before you can apply the tax offset details on the payee record. For more information, see Payee Details Validity Period.