Medicare Levy Surcharge for STP2

Leisa Kirby

Hi

How do I know what to put in this field? I've searched but can't find anything.

Help? :)

Kris_Williams

It’s up to them to tell you - I don’t think it’s your responsibility to ask. Would have been on the tax declaration they had to fill out I think

Acctd4

@Leisa Kirby If they’ve not indicated it on their TFN Declaration form, you can just disregard this field.

Rav

The Medicare Levy Surcharge and Medicare Levy Reduction (number of dependents field) is used for reporting only and is another component in the generation of the new tax treatment code in STP Phase 2. It does not have an impact on calculations.

With that said, if you have employees who are subject to the MLS or MLR, you need to ensure that you're making the correct selection based on those requirements.

More info below -

https://help.reckon.com/article/xkx7uw0xev-medicare-levy-reduction

https://help.reckon.com/article/mdz169r4nd-medicare-levy-surcharge

Rav

Hi @Leisa Kirby

Do you have any employees who are subject to the Medicare Levy Surcharge and/or Reduction?

Acctd4

@Leisa Kirby Very few employees understand what this is to select it - Do you have any that have actually selected it on their TFN Dec ?

Leisa Kirby

I'm sorry I don't know how I find out if my employees are subject to the medicare levy surcharge

Alex_10836088

Relates to the question of number of dependants - surely ATO is not expecting companies will be able to maintain this information for their employees - especially keeping information current through births, deaths, marriages etc

Does anyone know the impact of getting these questions for Medicare levy and dependants wrong ? - ie if we just add blanket response of NONE ?

Kris_Williams

I don’t know much about this but doesn’t it result in reduced tax? If so I would think the employee would make sure it was ticked in their details, and/or even check their payslip and tax deducted

Alex_10836088

These questions are not on the tax declaration form. They will have an impact on tax owed but have been calculated at end of year in tax returns.

I can't see anywhere in Reckon STP2 notes mentioning whether these fields are used for PAYG calculations or if they are soley there for STP2 reporting. But i suspect the latter - for example, there is a note that "STP Tax Category" is only for STP reporting but the "Tax Code" is what's still used for determining PAYG amounts.

Hence my question - do these fields REALLY matter and what are consequences for getting them wrong?

Acctd4

Hi Alex

You should find these questions are in line with the electronic version of the TFN Dec - that an employee can complete/prefill then print from their myGov - to give an employer.

I believe the latest TFN Declaration does also includes these but you won't find this form easily 😬 The ATO is no longer issuing their online or paper versions. I think you can still order them via post but the ATO are trying to move away from the paper version.

probbo

If the relevant MLS % to be assigned is based on Income Tier / Taxable Income, do you just assign what was used in the individuals previous tax year based on their Tax return taxable income & calculated MLS?

If this is for 2023/2024 you don't know what the individuals taxable income will be for that year to assign appropriate % or is it just as best guess as it's only for reporting not calculations....guess I'm like Alex  do these fields REALLY matter and what are consequences for getting them wrong?

Acctd4

@probbo As per above, it's not going to affect calculations, it's just a reporting field - If the employee has not indicated this specifically, you do not need to fill it in.

probbo

https://community.reckon.com/discussion/comment/20637022#Comment_20637022

@Acctd4 Thanks....seems odd to request a % Tier when this would not often be known as its based on taxable income for the year

Acctd4

Indeed @probbo - that's the ATO for you 🙄😂