Employees have the option to request additional tax be with held from the taxable income to cover repayments to their HECS or HELP debt. More commonly this additional tax relates to the repayment of a student loan.
This request is made via their Tax File Declaration and is applied automatically to their tax with held each pay period (Flare Pay customers).
Confirming the correct tax scale has been applied:
If the employee has selected the appropriate option on their TFN, their tax scale will automatically be set as: TaxScale2with Accumulated HELP
You can confirm this via the employees TFN: Employees> Employee Details > Payroll Setup > TFN
Or via the employees role page: Employees > Employee Details > Role - the tax scale is displayed above the payroll start date.
For Flare Pay customers this will be applied automatically to the employee's payroll record.
Note: If you utilize an external payroll service you will need to update this accordingly within that system.
How is the additional tax processed through Flare pay and paid to the ATO
Any additional tax that relates to HECS or HELP is deducted as part of the employees total tax withheld. This does not show as a separate line item on the employees payslip.
The additional tax is paid to the ATO as per your normal process.
How is HECS/HELP processed at the ATO
One of the more frequently asked questions by an employee is:
I have been making payments to my student loan each pay, but there are no payments showing against my loan, where is the money going.
These "repayments" are not made throughout the financial year like superannuation, they are calculated by the ATO at the end of each financial year once the employee has lodged their tax return.
The employee will be notified of the repayment calculation when they receive their notice of assessment.
How the deduction is applied and calculated can be found on the ATO website, or you can select the link below: