Tax Scales

payroll manages calculation of withholding tax seamlessly. The payrun performs an automatic tax calculation, which can be altered to account for rebates, variations, HECS and other exceptions which may be required by an employee. The automatic tax calculations may be overridden during the payrun, and manual or additional contributions can be made as required.

This section discusses withholding tax in payroll. For information on state payroll tax, see the section on states.

Viewing Tax Scales:

payroll stores tax scales for each financial year which has been processed in the system. The automatic tax calculation will use whichever set of tax scales matches the current financial year. To see which tax scales are currently installed:

  1. From Navigator select Company | Maintain company | Country Definitions.
  2. Expand the country in which you are operating.
  3. Expand the Tax Scales node to see a list of the various tax scales which are available.
  4. Expand a tax scale to see all financial years for which that tax scale has been installed. The system will automatically use the set of scales which match the current financial year.
  5. Select the current financial year to see the break points for that tax scale.

These figures have been provided by the ATO and should never need to be updated manually.

ClosedSetting an Employee's Tax Scale:
  1. To set an employee's tax scale, first open the employee file using an F3 search.
  2. With the employee's name selected on the left, click the Tax tab on the right.
  3. In the drop-down list, select the relevant Tax scale for this employee.
ClosedTax Variations:

Upon receiving official notification from the ATO of a variation to an employee's tax rate, you can apply a varied tax rate for a specified duration. To do this you should:

  1. Open the employee file using an F3 search.
  2. With the employee's name selected on the left, click the Tax tab on the right.
    Do not change the employee's Standard tax scale. The payrun reverts to this tax scale when the variation expires (see step 6).
  3. In the lower half of the screen, select the Tax variation box.
  4. Enter the Start date as advised by the ATO.
    The variation will take effect on the first payrun on or after the start date.
  5. Enter the Finish date as advised by the ATO.
    Most variations expire on June 30th of the current financial year. The payrun will continue processing the variation until the Payrun period end date is later than the Finish date.
  6. Enter the Varied tax rate as advised by the ATO.
    The payrun will use this rate for calculation of automatic tax for the duration of the variation. In the first payrun with a period end date later than the finish date, the system will revert to using the Tax scale selected above.

Tax Scales Wizard:

You will never need to enter tax scales manually. Whenever the ATO release new tax scales, the HR3 support team will release a program update containing the new scales. The latest tax scales are always available to download from the HR3 website.

Updating tax scales affects only the current company. This means that if you have more than one company in your database, you can safely perform each update separately.

To update your tax scales at the end of a financial year, use the year end wizard. To update tax scales in a new company, use the Company creation wizard. At other times, you can use the Tax Scales Wizard using one of the two methods outlined below:

ClosedDownload from the Web
  1. From the Navigator select Payroll | Taxation | Maintain tax rates.
  2. The Tax files window opens on screen.
  3. In the toolbar on the right, click the Download button. (If you cannot see the button, you may need to enlarge your window.)
    The wizard opens at Step 1 with Download tax scale from the web selected.
  4. Click Next to proceed.
    The wizard automatically links to the HR3 website and displays a list of available tax scales.
  5. Click on the required Date to begin downloading the attached scale. A transfer window shows the process occurring.
  6. Click OK when complete to close the wizard.
ClosedInstalling from a File

Depending on your Internet configuration, you may not be able to download tax scales from within the tax scales wizard. If this is the case, use the following procedure:

  1. Go to the HR3 website then follow the links to Support | Tax Scales
  2. Right click the link for the latest tax scales, and on the pop-up menu select Save target as.
  3. Save the tax scales file to your computer, ensuring that it has a .wlt extension, for example TaxScales2014.wlt
  4. From the Navigator select Payroll | Taxation | Maintain tax rates.
    The Tax Files window opens on screen.
  5. In the toolbar on the right, click the Download button. If you cannot see the button, you may need to enlarge your window.
    The wizard opens at step 1.
  6. Select Import tax scale from a file and click Next to proceed.
  7. At step 2, type the path and filename in the available field, or click on the Browse button and navigate to the folder where you have saved the file.
  8. Select the file and click Open to return to the wizard.
  9. Back in the wizard, click Next to continue.
    A transfer window shows the process occurring.
  10. Click OK when complete to close the wizard.