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Payroll system Tax calculation fomulas

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I'm new

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We are currently have an issue with our system provider over their calculation of HELP in an employees termination payout. Their arguement is that the system calculated that with the final payout the employee would be over the threshold for HELP calculation and proceeded to back calcualte the owed HELP portion of tax and wacked it on the payout to give a final tax rate of 69%. Understandablly the employee was less than impressed. The response we got back from the system provider is that the ATO provided the formulas for calculating tax and HELP, SFSS and such. They said that as the ATO didn't provide a formula for the calculation of tax on termination payments they never wrote the termination module to calculate tax any different.

 

What I am seeking is information on these formulas and wether there would have been a formula to handle termination payments?

 

Thanks

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Devotee

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Hi @NQWombat,

 

Thanks for writing to us. You can find the formulas used to calculate study assistance loans compulsory repayments on our website under Schedule 8 - Statement of formulas for calculating HELP, SSL, TSL and SFSS components.

Please note that this is just one element of the final calculation, and needs to be used in conjunction with other formulas when working out the employment termination payment.

 

You might also find it helpful to refer your former employee to our page on compulsory HELP repayments - it explains when you need to repay your loan and how we calculate the amount of the repayment.

 

Hope that helps!

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Taxicorn

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Not sure of any formulae, but Heccs/Help debt is calculated on total taxable income received for the year.

This would include payout out of annual/long service/sick leave, bonuses and any ETP.

 

Basically they have been paid the money and they owe the money so it is collected.

 

 

 

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Most helpful response

ATO Certified Response

Devotee

Replies 0

Hi @NQWombat,

 

Thanks for writing to us. You can find the formulas used to calculate study assistance loans compulsory repayments on our website under Schedule 8 - Statement of formulas for calculating HELP, SSL, TSL and SFSS components.

Please note that this is just one element of the final calculation, and needs to be used in conjunction with other formulas when working out the employment termination payment.

 

You might also find it helpful to refer your former employee to our page on compulsory HELP repayments - it explains when you need to repay your loan and how we calculate the amount of the repayment.

 

Hope that helps!