Taxation — Employees and Income Tax

An employee is required to provide a Tax File Number (TFN) declaration form in the following circumstances:

• commencement of employment
• after any break in employment
• where taxation details change

Information provided on the TFN declaration and the withholding declaration is used to determine the tax to be deducted from salary payments.

The TFN declaration(opens in a new window) form is available electronically on the Australian Taxation Office website or from selected newsagents.

Where a tax file number is not provided on the TFN declaration form, tax is required to be deducted at the highest marginal tax rate.

The declaration form is not forwarded to the ATO for employees paid on central payroll as this information is electronically conveyed to the ATO on a regular basis. The processed form should be retained in a secure location but not on the employee's personnel file.

For further information regarding taxation requirements refer to the tax file number declaration page on the ATO website and the instructions on the TFN declaration form.

TFNs are confidential. Access to an employee's tax file number must be restricted to those employees undertaking relevant payroll actions. Taxation and privacy legislation provides for severe penalties for the misuse of a TFN.

An employee can only claim the tax-free threshold with one employer. This is usually the employer who pays them the most salary.

A withholding declaration can only be provided after a Tax File Number (TFN) declaration has been lodged with the employer.

A withholding declaration may be required in the following circumstances:

• to adjust the amount withheld from salary
• to advise of a change to information previously provided in a TFN declaration

Declarations for school based staff are processed in the school. Staff in non-school locations should forward their declarations to Corporate People Services for processing.

An employee with a Study and Training Support Loan (STSL) debt must indicate on the Tax File Number (TFN) declaration that they have a study loan debt. The payroll system will automatically calculate tax deductions each fortnight in order to repay this debt. An employee who wishes to make additional payments to meet their STSL debt should make extra payments directly to the Australian Taxation Office (ATO).

From 1 July 2019 all study and training loans are covered by one set of repayment thresholds and rates. Further information regarding the change and threshold rates are available on the ATO website study and training loan repayment thresholds(opens in a new window).

A rebate can only be claimed on a Tax File Number (TFN) declaration form where the employee is claiming the tax-free threshold. A rebate reduces the amount of tax an employee is required to pay. A withholding declaration is also required when claiming these rebates. For more information regarding available rebates and eligibility contact Australian Taxation Office(opens in a new window).

Full details on variations(opens in a new window) can be found on the Australian Taxation office (ATO) website. For employees on the central payroll, any notice received from the ATO should be forwarded immediately to People Services. When a centrally paid employee applies to the ATO for a variation, the employer details must be shown as the 'Department of Education and Training'.

An employee may request that additional tax be deducted from their salary. This request must be in writing and remains in force until the employee withdraws the request in writing. An employee cannot request a reduced taxation rate other than by claiming an appropriate rebate approved by the ATO.

For school based employees an additional tax adjustment is completed at the school.

For central and regional based employees, forward the request to Corporate People Services of People Division (details are available in the Contact information on the Overview tab).

The tax instalments deducted from a lump sum payment of salary or allowance arrears are calculated in accordance with the rules specified by the Australian Taxation Office.

All payments of salary, including allowances, are included in the PAYG payment summary for the financial year in which the income is received. This applies to payments of salary or allowance arrears, even if they include arrears for a period in a previous financial year.

Tax is levied on payments for unused long service leave for an employee who has ceased employment at the rates determined by the Australian Taxation Office (ATO). Refer to the ATO website for Schedule 7 — Tax table for unused leave payments on termination of employment(opens in a new window).

Lump sum payments of workers' compensation payments that are calculated at a weekly or other periodical rate are taxed in accordance with the rates set by the Australian Taxation Office (ATO)

It is an Australian Taxation Office (ATO) requirement that where an employee is reimbursed for the use of a private motor vehicle (other than for transport or removal to a new location), the payment of the allowance is included on the employee’s PAYG payment summary. As a result, claims for use of a private motor vehicle must be processed on the payroll for school-based employees and on ProcureNET (Ariba) for public service employees.

Where total kilometres reimbursed for an employee for the financial year are less than 5,000km, this will be shown separately on the employee’s payment summary in the allowances box, but is not subject to PAYG withholding.

Where total kilometres reimbursed for the financial year are in excess of 5,000km this will be shown separately on the employee’s payment summary in the allowances box but is subject to PAYG withholding for any distance travelled in excess of 5,000km.

Further information on tax and payment of travel allowances (mileage) is available from the ATO Vehicle and Travel expenses for individuals link, under direct links to specific ATO information in the Resources tab.

Working holiday makers (WHM) with a visa subclass of 417 (Working Holiday) or 462 (Work and Holiday) are eligible to have a concessional tax rate of 15% for the first $45,000 of income earned. Higher marginal rates apply above this threshold.

Use the Tax update for working holiday maker VISA holders request for the concessional tax rate to be applied to a WHM employee.