How do I change the tax rate for my employee - he wants to pay less tax each week?

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  • Updated 11 months ago
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Changing the tax rate for an employee - he wants to pay less PAYG

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Stephanie

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Posted 11 months ago

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Charles van Rotterdam

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You can set him up as a % or a fixed amount in the employee setup

However if he wants to pay less PAYG then he ends up with a bill from the ATO at the end of the year

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Stephanie

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Thanks Charles where exactly in the set up can I do a fixed amount?  He is aware of the EOFY implications.
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Charles van Rotterdam

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Go to the Employee Centre, double click or edit employee and there under drop down for payroll, click on Taxes, change the Tax Code to No Tax that nothing is taken and then at the bottom you'll have an "Extra Tax' box, tick that and put in the amount you want to take
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Kevin Russell, Accredited Partner

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Oh he "wants" does he? Well he doesnt have that option. And you cannot accede to that request.
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adrian snaidero

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Individual has to apply to the ATO for a tax variation

Only on receipt of formal "notice of withholding variation" from the ATO can u consider any adjustment to tax rates 
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Kevin Russell, Accredited Partner

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Correct Adrian. He would have already filled out a declaration. You dont get the option to just make it up as you go along. It doesnt work that way
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Stephanie

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Yes we have written confirmation from the ATO to alter the PAYG amount on his pay.

Thanks for your help!

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Kevin Russell, Accredited Partner

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Hmmmm written confirmation. Ive never seen this, not ever.What would be the basis for this?
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adrian snaidero

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Its an official avenue for the individual to apply for a reduction in the tax rate. ATO will provide a written letter response to the employer authorizing a change in the rate tax expressed as a % to apply and normally is valid for a financial year but this is stated in the letter. Reasons for such could be hardship or that an individual will likely have sufficient deductions that would generate a considerable tax refund at year end hence why the request to amortise that by bring forward via tax rate reduction