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01 Jun 11 PAYG withholding schedules 2011

The ATO has released the withholding schedules specifying the amounts, formulas and procedures to be used for working out amounts required to be withheld by an entity in accordance with the pay as you go (PAYG) system, from 1 July 2011: Taxation Administration Act Withholding Schedules 2011 (Legislative Instrument F2011L00882; made 23 May 2011; registered 31 May 2011).

The legislative instrument contains 40 withholding schedules. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule. The withholding schedules facilitate the collection of income tax, Medicare levy, the Temporary Flood and Cyclone Reconstruction Levy (flood levy), Higher Education Loan Program and Financial Supplement repayments.

Amendments to reg 24 of the Taxation Administration Regulations 1976, the Medicare Levy Act 1986 and the introduction of the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Act 2011 affect payments made in the 2011-2012 financial year. These have resulted in changes to most of the current schedules and the creation of 12 new withholding schedules. There are 11 new withholding schedules to cater for those people who are exempt from paying the flood levy and one with formulas to calculate the flood levy component of a withholding payment. However, some remain unchanged.

The ATO will provide the necessary information to pay-roll and software providers, and those employers who code their own in-house pay-roll systems, to ensure that they have sufficient time to update their software packages.