Pay As You Earn

PAYE Bulletin 2

Employment Declaration Information for Employers

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Date of Issue: 1 July 1999

Valid from 1 July 1999

About this Bulletin

This Bulletin provides information for employers about employment declarations.

What is an Employment Declaration form?

It is a form which may be completed by your employees. It provides information that will help you work out how much tax to deduct from your employees' pay.

Completion of Employment Declaration forms

When and why should an employee complete an Employment Declaration form?

They will usually complete the form and give it to you by the first pay day after they begin working for you. They may lodge it with you if they wish their Pay As You Earn (PAYE) instalments to take into account the tax free threshold or rebate entitlements. If an employee chooses not to complete an Employment Declaration form, then you must deduct tax at the top marginal rate plus the Medicare levy.

When should employees complete a revised Employment Declaration form?

It should be completed within 14 days when:

• • their tax entitlement to a rebate reduces;

• • they acquire a Higher Education Contribution Scheme (HECS) debt; or

• • their entitlement to Family Tax Assistance reduces.

Note: Employment Declaration forms are available from the Tax Office and from newsagencies displaying the "N" logo.

When is it optional for employees to complete a revised Employment Declaration form?

It is optional when:

• • they decide to claim an entitlement not previously claimed; or

• • they fully repay a HECS debt.

What if employees have more than one employer at the same time?

Employees can have more than one job and therefore have more than one Employment Declaration form in force at any one time. However, the tax free threshold and any rebate entitlements can only be claimed with the employer who usually pays the most salary or wage. Any other employers are required to deduct tax at the higher rate.

Note: Employees can apply to the Tax Office to have the rate of tax deducted from their salary or wages varied to reflect their particular circumstances.

Do employees have to quote a Tax File Number (TFN)?

No. It is not an offence for employees not to quote their TFN on an Employment Declaration form. However, if an employee does not quote a TFN, you must deduct tax at the top marginal rate plus the Medicare levy unless the employee is exempt from quoting a TFN.

Who can claim exemption from quoting their TFN?

• • children under 16 who do not earn more than the tax free threshold, and

• • employees who receive certain Centrelink pensions or a Department of Veterans' Affairs service pension.

Note: This exemption does NOT apply to people who receive Newstart Allowance, Sickness Allowance, Special Benefit, Partner Payment or Additional Parenting Payment (partnered).

What about employees who need to apply for, or enquire about, a TFN?

If an employee tells you they have lodged a TFN Application/Enquiry form with the Tax Office you must allow 28 days for them to tell you their TFN. During this 28 day period you must treat their Employment Declaration form as if a TFN had been supplied.

If the Tax Office does not advise your employee of their TFN within 28 days an interim notice will be issued. If your employee has an interim notice you should continue to treat them as though they have supplied their TFN.

If your employee doesn't tell you their TFN within 28 days or they don't have an interim notice you must deduct tax at the top marginal rate plus the Medicare levy until your employee tells you their TFN.

What should I do with the completed Employment Declaration form?

Firstly, you should make sure:

• • your employee has answered all questions in Section A - Employee details, signed it; and

• • you have answered all questions in Section B - Employer details, and signed it.

Secondly, you should send the completed original of the Employment Declaration form to the Tax Office within 28 days of it being signed by your employee. You may be penalised if you don't do this.

Don't forget to allow 28 days for your employee to obtain a TFN if they have lodged a TFN Application/Enquiry form.

Can I send Employment Declaration information to the Tax Office electronically?

The Tax Office can accept this information on magnetic media. If you would like more information and specifications contact the Tax Office on 1800 679 974.

What about the privacy of the information contained in Employment Declaration forms?

Information contained in the Employment Declaration form is needed for tax purposes and is required under tax law. Some information may also be given by the Tax Office to certain government bodies, as prescribed in tax law. As an employer, you have the duty to safeguard any information contained in Employment Declaration forms that have been completed by your employees (especially the TFN). More information is provided in the pamphlet titled 'Safeguarding Your Privacy' which is available from the Tax Office.

Do you need more information?

The Tax Office produces a number of publications specifically written to help employers. This bulletin should be read in conjunction with those publications. The publications include:

• • PAYE Reference Guide for Employers;

• • PAYE Employer's Payment Book;

• • PAYE Bulletin No. 1; and

• • Income Tax Instalments Rate Schedules.

If you have any questions, or need more information about PAYE, please contact the Tax Office:

• • by telephone on our national enquiry number 13 28 66 . You can ring this number from anywhere in Australia for the cost of a local call;

• • in person by visiting the enquiries counter at the Tax Office. Addresses for the Tax Office are listed in TaxPack, as well as in the White Pages telephone directory;

• • by A Fax from Tax, our 24 hour fax information service. Simply call 13 28 60 (local call cost) on your phone or fax and follow the voice prompts; or

• • at our Internet site, ATOassist www.ato.gov.au

ATO references:
NO NAT 2392-7.99

Related Rulings/Determinations:
PAYE Bulletin 2 - Notice of Withdrawal