AU Payroll - Medicare levy surcharge
It would be good for Xero to add a Medicare Levy surcharge option for a percentage in the Taxes tab of employee set-up.
Currently if an employee wants a percentage taken we have to manually adjust each pay run to ensure the correct amount is taken and and reporting to ATO is therefore done correctly.
Leaving something as important as this to human error is not a good idea.
Korina Ivatt
shared this idea
Thanks for sharing your idea about adding the Medicare levy to AU payroll tax calculations.
We've reviewed your idea and now it's up to the community to get behind and support it. Make sure you share your idea with any colleagues that this could benefit so they can add their vote too!
Along with votes, other members can now comment to share additional detail about how your idea could improve their experience with Xero.
-
Samantha Mitchell
commented
This is crazy that it is not included in Xero. To leave this down to human error is very concerning! We have a varied workforce where no two payrolls are the same - to have to remember for 1 employee that we need to manually calculate this has me very worried.
-
Brittany Swash
commented
This is crazy that this functionality is still not available in Xero Payroll when it is specifically provided for under the Taxation Administration (Withholding Schedules) Instrument 2025.
The Instrument doesn't merely acknowledge Medicare levy variations — it specifically states:
“Where employees have answered yes to question 12, the software must be able to store the number of dependants shown at this question on the declaration.”
Yet Xero Payroll currently provides no field for an employer to enter the number of dependants from an employee's Medicare levy variation declaration.
This leaves employers having to manually calculate and override PAYG withholding every pay cycle for an entirely standard ATO declaration. That introduces an unnecessary risk of payroll errors and places the compliance burden back on employers using payroll software specifically to avoid manual tax calculations.
This isn't an obscure or discretionary payroll feature. The withholding schedules are made under the Taxation Administration Act 1953, and the Instrument provides the formulas and procedures for calculating the amounts employers are required to withhold.
I have attached the Taxation Administration (Withholding Schedules) Instrument 2025 for reference. I would strongly encourage Xero to treat this as a compliance functionality issue rather than simply a product feature request.
-
Brittany Swash
commented
I agree, to allow an employer to manually input a variation is crazy. Especially where the system doesn't take into account differences in pay, eg leave loading or lwop and you then need to manually work out each and everytime you are processing payroll.
