Here’s a timely reminder for end of the 2021 financial year. Because 30 June 2021 falls on a Wednesday, employers need to be aware of which year staff payments occur in that week, in case workers request an extra withholding amount to correct any PAYG shortfall in FY22.
Because there are 52.1429 weeks in a year, employees who are paid weekly (52 times per year) or fortnightly (26 times), will have an ‘extra’ pay day in some years – as will anyone paid weekly or fortnightly on 1 July 2021.
Jason Mackie, Aurion Product Owner for Payroll, explains the situation to organisations with pay days straddling the change in financial year: “Basically, if a customer sends their bank file to the bank for processing on the Wednesday (30 June) but they tell staff that Pay Day is always Thursdays, then the payment is deemed to have been received by employees on Thursday 1 July 2021.”
“Therefore, the payroll Date Paid should be set to 1 July and inclusion in the 2022 financial year.”
This is regardless of whether employees also bank with the same bank as the employer and they sometimes receive their money on the same day as the bank file is processed.
Employers may want to engage with their employees to determine if they want additional tax voluntarily withheld to cover an ‘extra’ pay day in FY22.
Further information and the extra withholding amount tables are available on the ATO website.