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Employer PAYG deduction on residential status change

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Initiate

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Hi,

Need your assistance on below;

If an employee is shifting from one residency status to the other in the same pay period, how the PAYG deduction amount is cto be alculated by the employer?

 For example: An Employee is in Monthly frequency. First 5 days, TFN defined as “Working Holiday maker” and remaining days as “Resident”.

Should the employer calculate PAYG based on the residency status at the time of wage payment ("resident'  in this example) or calculate proportionately for both status?

Currently our system calculates PAYG based on status at the beginning of the pay period

Thanks in advance

 

 

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ATO Certified Response

Community Manager

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Hi @jeengeorge,

 

Thanks for your patience while we checked that for you!

 

In your scenario the withholding rate should be at the resident rate for the pay period as this is their status for the majority of the month.

 

If there is any withholding difference then it will be correct in the tax return of the employee.

 

Thanks, Nate

 

 

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Community Manager

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Hi @jeengeorge,

 

We've sent this off to a specialist area to get an answer for you. We'll get in touch as soon as we hear back!

 

Thanks, Nate

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Most helpful response

ATO Certified Response

Community Manager

Replies 0

Hi @jeengeorge,

 

Thanks for your patience while we checked that for you!

 

In your scenario the withholding rate should be at the resident rate for the pay period as this is their status for the majority of the month.

 

If there is any withholding difference then it will be correct in the tax return of the employee.

 

Thanks, Nate