Policy last updated
15 June 2020
- Tax File Number (TFN) declaration
- Tax-free threshold withholding declarations
- Higher Education Loan Schemes (HELP and SFSS)
- Variation to the PAYG withholding amount deducted
- Tax on arrears payments
- Tax on payments of unused long service leave
- Tax on workers' compensation payments
- Tax and payment of travel allowances (mileage)
Policy and Guidelines
Policy and Guidelines
The information provided here is general information only to assist principals, managers and employees in matters relating to the payment of income tax. The information provided here in relation to employee or employer taxation obligations applies to those employed on the Department’s central payroll system including School Local Payroll (SLP) on eduPay employees.
For comprehensive taxation information, particularly concerning an individual’s tax situation, refer to the website.
Tax is deducted from all payments made on the payroll in accordance with ATO guidelines and the information provided by the employee on their Tax File Number Declaration and, or Withholding Declaration.
The ATO provides tax instalment schedules and an online Tax Instalment Calculator that can be used to determine the tax to be deducted from fortnightly salary payments. The schedules and the calculator are available on the ATO web site (refer to the tab).
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.
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).
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 .
Full details on 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.
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.
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 tab.
Reviewed 10 March 2020