Work Full-Time with Tax Paid Every Fortnight, but ATO Telling Me I Owe $3k

SlavOz on 16/12/2020 - 17:13

Looking for some very general financial advice here as I haven't had time to speak to a tax man yet.

Basically I work full time on a salary ($80k). I get paid every fortnight with about $700 in tax taken out.

Upon lodging my tax return on MyGov, it tells me that I owe an additional $3k to the ATO. How can this be possible if I've been paying all my taxes as required every payday?

Has my employer potentially been under-taxing me?

I have a HECS debt and and an ABN in my name but I didn't earn any income through it.

Financial

Comments

  • rldowling03 on 16/12/2020 - 17:17
    +8

    Looking at https://www.paycalculator.com.au/ for $80k per year you should be seeing about $850 come out ($900 for last financial year) in tax per fortnight not $700. Check with your payroll department and make sure they're aware of your hecs debt.

    When I started my position, they didn't deduct it automatically, I had to follow it up and sign a form to get it deducted from my pay.

    • spackbace on 16/12/2020 - 17:18
      +3

      Yep and $150+26 = $3900, which sounds about right

      When I started my position, they didn't deduct it automatically, I had to follow it up and sign a form to get it deducted from my pay.

      I had the same and instead I just paid the tax debt back as a yearly deduction each fortnight, like an interest-free loan effectively.

      • rldowling03 on 16/12/2020 - 17:36
        +1

        Yeah. I get a couple lump sum bonuses every year which push me into higher brackets of repayment, so I always end up with a tax debt at the end of the year, but same as you, just pop it on an interest free payment plan for a year and no big deal.

        Last year of HECS debt for me though. Best loan I've ever had.

        • sghetti on 03/01/2021 - 08:43

          If your employers paid the tax on the lump sum bonuses correctly you wouldn’t have a tax debt either.

          As long as all of your income/salary/bonuses are controlled by your single employer then there is no reason to come out with a debt, other than your employer not paying the correct amount.

          I think everyone needs to remember though, this isn’t just a black hole debt, you got paid additional in to your pocket over the year rather than it going to the ATO.

          • rldowling03 on 03/01/2021 - 09:17

            @sghetti: They do pay the tax on the lump sum correctly.

            The lump sums takes me into a new bracket of repayment for my debt, so going from 9% to 10%, they only pay the 9% throughout the year as that's what my repayment should be for my annual income excluding bonuses, so I have to make up the 1% difference at tax time. Since these bonuses vary in size and not always guaranteed, different years have put me in higher brackets and some haven't.

            I could easily tell payroll to just pay the 10% all year round, and get it refunded at the end of the year if needed with no debt, but oh well

      • Muzeeb on 16/12/2020 - 17:46
        +16

        Yep and $150+26 = $3900

        Are you in charge of financing new cars?

        • spackbace on 16/12/2020 - 18:15
          +6

          Mayyyyyybe

          • dasher86 on 16/12/2020 - 21:05
            +4

            @spackbace: They always say dealerships make more money on finance.

        • bobbified on 16/12/2020 - 18:36

          🤣🤣

    • SlavOz on 16/12/2020 - 18:34
      -3

      Thanks. I definitely recall seeing HECS payments on my previous pay slips. My employer is definitely aware of it, maybe they just weren't taxing it enough. I'll speak to my accountant.

      • spackbace on 16/12/2020 - 19:11
        +7

        You recall? Why don't you look at them and report back…?

        • SlavOz on 17/12/2020 - 11:28

          Access to my online payroll system is limited.

          I checked now, they were deducting HECS a while ago but for some reason they stopped. Not sure why. It's not on my recent payslips so that must be the issue.

          I now have a debt due to a debt of another debt.

          • SBOB on 17/12/2020 - 11:44
            +6

            @SlavOz:

            I now have a debt due to a debt of another debt.

            You got to use that money for whatever you wanted for the year, rather than lending it to the government interest free, until tax time when it is due

            I'd not even tell your payroll, put that money aside every week/pay into some kind of savings/offset/investment and then pay it at tax time.

            • aragornelessar on 17/12/2020 - 21:00
              +1

              @SBOB: Exactly this. My mileage and per diems go into an offset, going towards my mortgage before going back to the tax man later next financial year. Better than going to the taxman and not being of use to me.

  • spackbace on 16/12/2020 - 17:17
    +8

    I have a HECS debt

    You earnt over the HECS threshold, so the debt is you paying back your HECS, if your employer hasn't been deducting it automatically…

  • brendanm on 16/12/2020 - 17:25
    +3

    It's your hecs debt.

  • Bargain80 on 16/12/2020 - 17:29
    +1

    Don't forget your medicare levy as well.

    • SBOB on 16/12/2020 - 17:31

      They are under the Medicare levy threshold

      • Bargain80 on 16/12/2020 - 17:49

        threshold is $28,501.
        OP income is way above the threshold?

        • SBOB on 16/12/2020 - 19:52
          +2

          Assumed you were talking surcharge

          Medicare levy is applied to everyone and is included in tax taken out of each pay cycle
          Surcharge effects higher earners and is an extra which is applied at tax return time.

  • andresampras on 16/12/2020 - 17:32
    +3

    Case closed.

    Side note: Unless you're really bad with money management, don't be one of those people that chases the thrill of a big tax refund lump sum by getting work to deduct more than what's needed every pay cycle.

    Yes, there are people who do this.

    • spackbace on 16/12/2020 - 17:42

      Yep, work with someone who chose not to use the tax-free threshold for this reason

      • dasher86 on 16/12/2020 - 21:07

        Should get my mum to do this. She always complains to me her friends get a higher return.

    • tsunamisurfer on 16/12/2020 - 18:40
      +3

      I would rather the money stay with me and I can invest it then pay a big bill at the end of the year.

      • MrBear on 17/12/2020 - 14:52
        +1

        Who is this "Big Bill" you speak of?

    • elgrande on 16/12/2020 - 23:12

      Yep, I knew somone who did this…

  • Muzeeb on 16/12/2020 - 17:48
    +2

    Did you add deductions for your mustang?

    • SlavOz on 16/12/2020 - 17:49
      +1

      No, the ATO only covers 6 cylinders or less. My car has 8. It's too powerful :(

      • Muzeeb on 16/12/2020 - 17:50
        +2

        I think it's only auto (plus tiptronic) 6 cylinders now that I reflect on it.

        • SlavOz on 16/12/2020 - 18:00

          Crooks

        • bloom on 16/12/2020 - 19:25
          +2

          Just claim 75% of your expenses (6/8 cylinders)

      • brendanm on 16/12/2020 - 18:44
        +1

        Just tell them you don't rev it over 4000rpm, and it isn't making that much power at that point.

      • dasher86 on 16/12/2020 - 21:08

        Sounds like you forgot to include 5km business kilometres…

    • rompastompa on 16/12/2020 - 17:56
      +6

      It's OK, his debt won't go over 4k..

      rpm

  • Tee Rex Arms on 16/12/2020 - 19:49

    I had payroll continue to deduct HECS for years after I had paid it off, was a nice little bonus come tax time and always went towards a holiday fully paid for.

    • dasher86 on 16/12/2020 - 21:09
      +3

      Now picture it if you had that money upfront and could use that money to book a holiday anytime.

      • Tee Rex Arms on 16/12/2020 - 21:39
        +3

        It’s forced savings for those who lack fiscal discipline I.e me. So if it works for me I’ll continue to do it.

        • avoidfullprice on 16/12/2020 - 22:14
          -1

          It must be tough being on ozbargain forum for someone who lacks fiscal discipline. all the temptations when you get your tax refunded!

  • avoidfullprice on 16/12/2020 - 20:22
    +2

    While you are checking your payslip, check if your employer has been giving you super correctly.

  • trustnoone on 16/12/2020 - 20:37

    Are you in healthcare? Do you salary sacrifice (food?)

  • Lawrencep93 on 17/12/2020 - 07:58
    1. Get an accountant and proper advice & also will extend your tax payable due date to the 5th of June 2021
    2. Update your TFN declaration with your employer ticking the have a Hecs/Help debt so they withhold more tax
  • OzHunterNSW on 17/12/2020 - 09:44

    Read it carefully. This would most probably be your HEX debt.

    • SBOB on 17/12/2020 - 10:21
      +2

      I write my debts in hex so they look smaller :)

      • avoidfullprice on 17/12/2020 - 10:50

        My balance was $ 0xdeadbeef

        • DSXC on 17/12/2020 - 12:11

          Wow, $3.7 billion. That's a pretty large hex debt.

      • andresampras on 17/12/2020 - 10:56

        and then put a hex on 'em, to make sure they stay hexed

  • AussieDolphin on 03/01/2021 - 01:48

    I had the exact situation. The ATO withheld 3.5k. Apparently I didn't pay enough tax either. Same salary and also a HECS debt.

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