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Tax calculation for changing ABN in one pay period

Newbie

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Hello All,

 

I have an employee who has been paid on fortnightly basis. He was transferred to other entity ( different ABN) in the mid pay period. Thus, he received two incomes from two different entities with two different ABNs. 

 

Our system calculated the tax matched fortnight tax table for this employees' pay in the first ABN. However, the system projected higher income (the taxable income in tax formula higher than employees' actual pay) when calcuating the tax for the income under second ABN. It caused employees' tax higher than tax table when i compared. Our tech explained that this projection happened when employees change ABN in the same pay period. 

 

Is it the correct approach? Shall we project higher income when employees' income split two ABN? Shall this treat as calculation like employee joined mid pay period? 

 

Thanks, 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @Monica_K,

 

Your employee would need to submit a new TFN declaration for the second entity. You can only withhold based on the TFN declaration provided for each entity. If the employee requests more tax to be withheld, they can put that to you in writing.

 

Otherwise, you have to rely on the fortnightly tax tables, treating each payment separately. If there is too much tax withheld, it will be refunded when the employee lodges their income tax return.

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @Monica_K,

 

Your employee would need to submit a new TFN declaration for the second entity. You can only withhold based on the TFN declaration provided for each entity. If the employee requests more tax to be withheld, they can put that to you in writing.

 

Otherwise, you have to rely on the fortnightly tax tables, treating each payment separately. If there is too much tax withheld, it will be refunded when the employee lodges their income tax return.