PAYG Tax does not change when Flood Levy applied in QuickBooks 2011/12 R2

Legacy KB ID: 4159

Question

My employee is earning more than $50,000 and is not exempt from the Flood Levy, but he is still paying the same amount of tax as last year.  Why?

Answer

The ATO formula for the Flood Levy stipulates that the amount of Flood Levy be rounded down to a whole dollar amount, in line with the procedure for other taxes. 

This stipulation means that an employee must be earning $60,400 per year, or $1,061 per week (tax-free threshold claimed), before one dollar of Levy is deducted from pay. 

It will be at $70,700 per year or $1,261 per week (tax-free threshold) before the levy deduction amount will jump from one dollar to two dollars a week.

Employees are still liable for the full amount of the Levy on their annual income.  This method of applying the Levy will mean that some employees will have less than their full liability for the Levy deducted from their regular pay.  The shortfall will be recovered in annual income tax returns. 

To confirm the correct amount of tax payable users should check details with the ATO tax calculator on their website.

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