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AU Payroll - Option to enter withholding tax variation as an additional percentage

The witholding variation should be on top of the existing PAYG calculation not overrides it, as it currently does. If an employee completes a MyGov employee Tax Form and notes they want an additional % amount variation withheld - it should be on top of their existing PAYG tax, not instead of it. There is no other option to put in a percentage amount in XERO.

Or allow the upward variation amount to be a percentage amount - not just a fixed amount.

The screenshot attached shows this employee should be paying tax on the full amount (no threshold claimed) but the pay run only calculated a total of 10% tax.

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Racheal Leigh shared this idea  ·   ·  Report…  ·  Admin →
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Accepted  ·  AdminDavid Reynolds (Admin, Xero) responded  · 

Hi everyone, thanks for your feedback on this. We appreciate you sharing how important it is to be able to add an additional percentage on top of PAYG.

As you’re aware, you can increase the amount of tax withheld each pay, however the figure must be a fixed amount.

We understand some of you have been using workarounds like manual calculations or withholding variations, which create challenges if employees earnings are not fixed.

While this feature isn't currently on our roadmap, we've updated this idea to Accepted, so that it’s up for formal consideration.

We're grateful for your continued input as it helps us understand what matters.

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  • Maria McAdam commented  ·   ·  Report

    Under taxes there is the option: "has approved withholding variation" and you can set a blanket tax rate there. But not as an additional tax rate over and above their default, which runs contra to the ATO.

  • Maria McAdam commented  ·   ·  Report

    I have my employee's ATO form: per the ATO they have chosen a % as additional withholding - they are paid on a casual basis so a different rate each fortnight ... but Xero Payroll can't handle it. PLEASE FIX

  • Sam Gray commented  ·   ·  Report

    This is dumb af. The ATO gives employees the choice to choose a % as additional withholding... but Xero Payroll can't handle it. TF?

  • Minnie Russnak commented  ·   ·  Report

    not on your roadmap???

    IS THIS A JOKE !!!

    it doesnt look like anything is on your roadmap .... not a SINGLE problem I have encountered is on your roadmap ... some of the requests have been outstanding for 10 years ..... thats almost a generational void of no development ....

    shocking

  • Andrew Buckingham commented  ·   ·  Report

    Similar to Sports Admin on 16 Oct 25, we have seen a couple of these recently and the fact that an extra % can't be used in the software leaves too much room for error in processing payroll. If the ATO allow such a declaration, then it is critical that the software allows the employer to action such a request in an accurate manner.

  • Sports Admin commented  ·   ·  Report

    I've just had 2 employees request upwards withholding as they both got a shock after submitting their tax returns. Both are casual and work multiple jobs and the ATO 'no tax-free threshold' rate wasn't enough to cover them. As they work for us intermittently, the ability to withhold an additional percentage would be useful. Thank you!

  • Dale Beven commented  ·   ·  Report

    surprised this is not already an option. please add asap, very important

  • John Lewis commented  ·   ·  Report

    Same for a % increase due to an ATO approved Medicare levy variation.

    Having to manually calculate taxes in a product you pay a premium for is slightly ridiculous

  • Kellie Buck commented  ·   ·  Report

    I've just had my first official request for a withholding % and have come across this thread. Please add this into Xero. If its been raised such a long time ago and seems to be something that employees can generate freely in MyGov, it needs to be addressed as a matter of urgency

  • Melanie Brookman commented  ·   ·  Report

    How is this still an issue guys. Please may this be assessed and updated ASAP. Raised over 2.5 years ago and still not addressed.

  • Nikki Tran commented  ·   ·  Report

    It's been over 2 years since the request was raised and still no action from XERO! Surely it's not that hard!

  • Maria McAdam commented  ·   ·  Report

    If ATO provides it as an option, it should be enabled in Xero.

  • Fiona Campbell commented  ·   ·  Report

    Please stop making us calculate this manually every fortnight!

  • Rachel Robertson commented  ·   ·  Report

    This is a really important feature to me - doing payroll for 30 people, I CANNOT manually calculate taxes for 5 of them. Xero makes everything else so easy but this is incredibly difficult. If ATO provides it as an option, it should be enabled in Xero.

  • David Bowler commented  ·   ·  Report

    Why has this not been done yet? Pretty important feature to not be manually calculating and messing up pays. I bet your programming would fix it the day that it impacted them. Not real happy that this is still ongoing nearly 2 years on

  • Henriette Csano commented  ·   ·  Report

    This is really non-compliance by Xero. If a government document provides you with this option then it should follow that the software should allow this.

  • Jenan Bakka JP CPA commented  ·   ·  Report

    This feature is desperately needed. I can't allow my clients to manually create an adjustment to the payroll each week and risk them mis-calculating the amount to be withheld. Aside from the fact that it's just cumbersome, it's just highly erroneous and their staff won't appreciate the wrong amounts being withheld each week. When will Xero action this?

  • Meredith Hammond commented  ·   ·  Report

    First time i have had an employee request a % amount to be taxed over and above his normal. Cant believe that Xero does not allow for this calculation. Manually having to calculate this percentage every pay week is simply not OK. Fix it. if the ATO allows for employees to do this then the accounting program should also comply.

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