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nathan.greenaway's avatar
nathan.greenaway
Virtual Explorer
3 months ago

Adjusting tax withheld in Xtools+

Hi there,

Could anyone advise whether it is possible to adjust the 'tax withheld' for future financial years in an Xtools+ scenario?

In our current scenario, the prospective client has additional tax withheld each year as a form of 'forced savings,' resulting in a tax refund. I would like to accurately reflect this in their current scenario illustrations

Cheers Nate

xplan
  • Julie.Conneely76859's avatar
    Julie.Conneely76859
    Curious Observer
    7 days ago

    I have a similar query - we have a client that pays extra PAYG tax of a set $ amount per fortnight. I would like to know if this can be modelled to accurately reflect in both cashflow and tax details. 

    • lana.graham's avatar
      lana.graham
      Icon for Iress Contributor rankIress Contributor
      4 days ago

      Hi Julie.Conneely76859 ,

      As noted earier, you currently have the option to claim the tax free threshold or not - there is no way to set another level of PAYG withholding. 

      I'd be happy to record your feedback and consider adding more options, however I wasn't aware you could vary your PAYG tax amount in set $. I'm very interested to see some examples of how the ATO applies an income tax withholding variation as I want to think about how we might align the PAYG withholding inputs - can you help?

      kind regards,

      Lana Graham 
      Associate Product Manager - Xtools

  • lana.graham's avatar
    lana.graham
    Icon for Iress Contributor rankIress Contributor
    2 months ago

    Hi nathan.greenaway,

    So wonderful to receive a question about Xtools+!

    So it seems like your client has lodged an income tax withholding variation with the ATO to have PAYG withheld at a set percentage - is that correct?

    There isn't currently an option to withhold tax at a set percentage, but you can adjust whether they are claiming the tax free threshold or not. 

    Here's what it looks like when you are entering the salary:

    Would it work for you to set the Claim tax free threshold option to No?

    Kind regards,

    Lana Graham
    Associate Product Manager - Xtools

    • nathan.greenaway's avatar
      nathan.greenaway
      Virtual Explorer
      2 months ago

      Thanks for your reply, lana.graham 

      Unfortunately, setting their claim tax-free threshold option to 'No' still doesn't accurately reflect their current situation. After reaching out to a few others, it seems this scenario may be difficult to model. Some have suggested creating a bank account with a 0% interest rate (to track the additional tax withheld), directing this portion of their income (the additional tax withheld) to this bank account, and then transferring these funds back as a 'tax refund' (via capital receipt) each year. However, this approach also fails to accurately reflect their after-tax employment income in their cash flow.  

      Ultimately, we could still illustrate the tax savings and the other benefits of our advice in their SOA. 

      Thanks again for reaching out. 

      Cheers Nate  

      • lana.graham's avatar
        lana.graham
        Icon for Iress Contributor rankIress Contributor
        2 months ago

        Hi nathan.greenaway ,

        Thanks for your reply. Was I correct that your client's PAYG tax is being withheld at a set percentage? What is the percentage used in this instance? I'm asking in case this is something we can build.

        Thanks,

        Lana Graham
        Associate Product Manager - Xtools

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