What you need to be aware of for Financial Year 2020/2021
Now that most of you have or are completing Tax Year end and preparing for the new financial year, this is a reminder to check whether your weekly or fortnightly payrolls include 53, rather than 52 weeks or 27, rather than 26 fortnights.
How does this this occur?
Every now and then a Tax year will not have 52 weeks or 26 fortnights depending on when your pay period ends start and finish. You may end up with an extra pay cycle, so you will need to check how many paydays you have in the 2020 / 2021 tax year.
In the case of a 53 week or a 27 fortnightly payroll, the extra pay may result in insufficient tax being withheld from the employee, as ATO tax tables Wage Easy software use a standard 52 weeks or 26 fortnightly per year divisors in the calculation of Tax.
You may want to communicate this to employees, so they are aware of this now and not at the next Tax return time, as they may have additional tax to pay. Employees can opt to pay an additional tax amount each pay period.
This additional amount should be entered in the employee file under payments/tax. Enter the additional amount in the adjustment.
The following guidelines are provided from the ATO
The ATO have published charts for the 2020/2021 Tax year which provide a guide to the additional tax to withhold should the employee want extra tax withheld each pay cycle:
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