To update an employees tax file declaration you need to open the employee file and then click the 'Tax File Declaration' tab on the left menu.
Important information on this page includes:
- Employing entity: This option will only appear if there is more than one employing entity set up in the business. If you want to change the employing entity that pays the employee click on "Change" and then select the employing entity from the drop down list that you want to be changed to. There is also the option to select when to change the employing entity as of e.g. "Today", "Employee's start date", "Custom Date".
- Employment type (required). Click on the drop down to select.
- Additional information. Note that the first two boxes Australian Resident For Tax Purposes and Claim Tax Free Threshold are ticked by default. You must untick these if the employee is not an Australian Resident and/or they cannot claim the tax free threshold (second job etc).
- Whether the other boxes should be ticked or not (seniors offset or STSL debt) will depend on the individual employee and what they have nominated on their tax file declaration form.
- If an employee is not an Australian resident for tax purposes, they cannot claim the tax free threshold.
- Only a non-Australian resident can be an approved working holiday maker. For more information on what an approved working holiday maker is, click here.
- The "Has approved withholding variation" field should only be selected if the employee has written approval from the ATO that their tax rate should be set as per their instructions. Ticking this checkbox will then display a new % field where the tax rate % percentage should be added (as a number only). If the ATO has advised that no PAYG should be deducted for the employee, then enter '0' as the value. N.B. This variation amount will override any other setting in the additional information section.
- The Medicare Levy Exemption allows you to select from 'None', 'Half' or 'Full'.
- Date signed field is able to be left blank, otherwise input the date that the employee signed the hard copy tax file declaration.
- Lodgement Status shows the date (and how) the declaration was lodged to the ATO.
Click 'Save' when finished.
To re-lodge select 'Clear lodgement' before submitting again. This can be done if you need to make changes to the original submission and need to lodge again.
Visit the Australian Tax Office for more information regarding tax file declarations.
Before lodging the tax file declaration, businesses (and each employing entity) must first enable electronic lodgement and register their software ID.
To do this, go to payroll settings -> ATO Supplier Settings and follow the instructions to enable electronic lodgement.
You will not be able to electronically lodge a TFD without first completing this process.
Lodging the Tax File Declaration Electronically
You may opt to lodge the tax file declaration electronically using Standard Business Reporting (SBR). To do so, click the 'Lodge with ATO' button.
Doing so will display a dialog explaining the terms of the declaration:
The terms must be accepted before the declaration can be lodged. Once the terms are accepted, click 'Lodge Now' button and the tax file declaration will be lodged electronically.
If you have any questions or feedback, please let us know via firstname.lastname@example.org.