Theory 3

Question 1

When is the TFN Declaration form filled in? By whom? How is it used?

Answer 1

The TFN Declaration form must be completed by the employee and countersigned by both the employer and employee and lodged with the ATO within 14 days of the employee starting work. The employee requires a tax file number prior to completing this form. The tax file declaration form helps the employer determine what rate of tax must be withheld for each employee.

Question 2

Explain the difference between an employee contributed superannuation and an employer contributed superannuation.

Answer 2

Employee voluntary contributions are contributions that can be made by an employee on a voluntary basis if they wish to provide a more substantial benefit for their retirement, whereas Employer compulsory contribution is when Under the Superannuation Guarantee Act 1992, employers are compelled to provide superannuation on behalf of their employees. The minimum amount is 9% of gross normal earnings.

Question 3

Define income tax instalment.

Answer 3

Income tax instalment is an estimated amount of income tax that an employee must pay on gross earnings per pay period.

Question 4

Explain the term “salary sacrificing”.

Answer 4

Salary sacrificing is when the employee sacrifices cash in exchange for the employer paying for some other item for the employee.

Question 5

Explain the term PAYG.

Answer 5

Pay as You Go is a withholding system which operates in Australia whereby income tax is paid as the income is earned.