Import updated ATO Tax Scales Overview
This technical note provides guidance on how to import updated ATO tax scales released by the ATO and disseminated to our SapphireOne clients, prior to the beginning of each financial year.
Each financial year, the Australian Tax Office updates tax scales, and SapphireOne programmers provide a file containing these revisions for easy import by clients. This streamlines the process of updating tax scales for the new financial year. SapphireOne uses this file to calculate the tax payable by each employee when executing a Payrun. If the new tax scales are not imported at the beginning of the financial year, SapphireOne will continue using the previous year’s scales. As a result, it is essential to import the new tax scales annually to maintain accurate calculations and adhere to tax regulations.
You can find the new tax scales in the public section of the SapphireOne Synology File station under Download > Tax Scales. Once the new file becomes available, you can import it at any time without needing to delete the old scales, though some users may choose to do so. By keeping your tax scales current, you can ensure your payroll processes are accurate and compliant with Australian tax laws.
This text file may be obtained by contacting SapphireOne support staff.
Do NOT delete the previous year’s Tax Scales until ALL Payruns have been processed for the closing Financial Tax year.
SapphireOne uses the dates embedded in the Tax Scales, to select and apply the correct Tax based on the dates entered by the user.
Users must import the new tax scales before processing any Payruns in the new financial year. If the previous tax year has been completed and no tax scales have been imported for the new tax year, SapphireOne will search for and use the tax scale with the latest date, which would be the previous year’s tax rates. SapphireOne will continue using the most recent tax scales until a later-dated version is imported. Consequently, any Payruns processed without importing the new tax scales will be incorrect, as they will have used the previous year’s tax scales.
The name of the text file will be FinancialYear.txt. The file is also available as a zip file named FinancialYear.zip. You must first unzip this file to allow SapphireOne to read the FinancialYear.txt file contained within the zip file. Remember, the file name must have a .txt extension for SapphireOne to recognize it.
Viewing Current Tax Scales
To view or edit the tax scales currently installed on SapphireOne go to Payroll > Administration > Tax Scale Inquiry
The tax scales displayed below are from the 2016-2017 tax year.
As illustrated in the screenshot above, when you import next year’s tax scales, SapphireOne will have two sets of tax scales, and the rules for using them are as follows:
- If two sets of tax scales are present, SapphireOne will use the set corresponding to the year in which the Payrun is being executed. For example, if it is the last Payrun for the 2021-2022 financial year, it will use the 2015 Tax Scales. For the subsequent Payrun, which would be in the 2022-2023 financial year, it would use the 2022 Tax Scales.
- If there is only a single set of tax scales, SapphireOne will continue using them until they are updated.
If SapphireOne only contains the previous year’s tax scales, it will continue using them until the current year’s tax scales are imported. As a result, errors in taxes applied to all employees may occur. It is crucial to update tax scales at the end of each financial year before executing the next year’s Payruns.
It is recommended to delete the old tax scales once the current tax year has begun. To perform a sort by date, click on the date heading. This will group tax rates into two categories based on their date. Select the old tax rates carefully and use the button on the main toolbar to delete them.
Importing the Tax Scales
The process is as follows
- First get the Tax Scales text file. This file is a specially created file available from SapphireOne and is on the ftp server in the downloads folder. The current name for the file is TaxRates010723.txt for the 2022-2023 tax year and next year it will be TaxRates010722.txt for the 2023-2024 tax year.
This file will be in the name format Tax Rates Text FinancialYear.txt With it in the same folder will be a zip file containing the text file. It has an extension of .zip at the end of the file name. SapphireOne will not import the zip file it must be uncompressed first.
- Place it in a location that you know where to find it. Then to import the new Tax Scales go to Utilities > Utilities > Custom Functions > Payroll Tab
- Select the Payroll Tab. Next go down and select ImportTaxRatesText. The standard search screen will be displayed enabling you to select the correct file. In this case below the file has a name of TaxScales2010.
- SapphireOne will ask the user for a commencement date to be entered. Check this if you are early or late updating the Tax rates as SapphireOne has a guess at the data to enter based on the current date in the computer. The file is on the desktop on this computer, so SapphireOne will display the standard search screen as seen to the left for an iMac.
- Check that the Tax Scales have been imported correctly on the next page. If the tax rates have not been imported look closely at the screenshot above. Both the zip archive and the text file are on screen.
Make sure you select the text file and not the zip archive.
Viewing the Results
The exact same principals and procedures will apply in later years. While the ATO will add some scales and delete others, all tax scales that are required for your payroll for the current tax year will be contained in the txt file that is correct for the current tax year.
To view, edit or add to the tax scales currently installed on SapphireOne go to Payroll/HR > Administration > Tax Scale Inquiry. SapphireOne will sort these entries by default by name, the user will note that we now have entries ending in 22 as well as 23. This is because we have not yet deleted the old tax scales from SapphireOne.
SapphireOne will still use the Tax Scale entries dated 22 for the remainder of the 22-23 tax year, even though there could be weeks or perhaps a month to run in the current year.
For the first Payrun that is processed in the new 22-23 tax year, SapphireOne will commence using the new Tax Scale entries dated 22 and will continue to use then from then on.
Unless new Tax Scales are imported with later date SapphireOne will continue use these new 22 rates forever. Logically, before the end of the financial year you will import the next lot of Tax Scales and SapphireOne will commence using them when appropriate.
Do NOT delete the previous year’s Tax Scales until ALL Payruns have been processed for the closing Tax Year.
Removing Old Tax Scales
After the final Payrun has been completed for the financial year the old Tax Scales may be removed.
- First click in the Date From column to sort the tax scales by date.
- If the sort is reversed click on the Date From heading again. SapphireOne will then re-sort the tax scales by date only, as seen in the screenshot below. This will enable a quick and easy method of selecting all of the old tax Rates
- To remove old Tax Scales highlight them as seen above then select the button on the main tool bar.
- To delete all of the highlighted items select the button in the pop up as seen to the right.