Excess PAYG was withheld because employees didn’t claim the tax-free threshold at onboarding and STP has already been reported. Q1 BAS is lodged and Q2 is not yet lodged. What is the ATO-recommended way to handle this?Can excess PAYG be carried forward/offset in the next BAS without reimbursing employees, or should employees only recover the excess when they lodge their individual tax returns?
Hi,
doesn't sound like anything needs to be done unless the employer made an error too.
If the employee provided a complete TFN declaration and did not claim a tax-free threshold initially then withholding is correct.
If they subsequently updated their choice, then reduced withholding will apply going forward not retrospectively. The "excess" can be recovered when they lodge their ITR.
Hi,
doesn't sound like anything needs to be done unless the employer made an error too.
If the employee provided a complete TFN declaration and did not claim a tax-free threshold initially then withholding is correct.
If they subsequently updated their choice, then reduced withholding will apply going forward not retrospectively. The "excess" can be recovered when they lodge their ITR.
Hi @Bmlahiru,
We asked our subject matter experts to weigh in.
They've advised you can't carry forward excess PAYG withholding amounts to offset future BAS obligations as these amounts belongs to your employees.
The PAYG system helps employees pay the right tax for the year. When they lodge their income tax return, tax withheld by you will be automatically credited against their total tax liability based on their taxable income.
If too much is withheld, any refund is processed through the employee’s tax return, not through your BAS.
Encourage your employees to:
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