In some income years, if you pay your payees:
- fortnightly - they will have 27 pay days for the year instead of the usual 26
- weekly - they will have 53 pay days for the year instead of the usual 52.
The withholding tax tables we publish are based on the normal number of pays in a year. Tax rates increase as taxable incomes increase. Therefore, the additional pay day will mean that amounts withheld from salary or wage payments made to many payees will not cover the amount payable when they lodge their tax returns.
Every taxpayer's circumstances are different, but those who normally expect to receive a small tax refund at the end of the year are likely to find that they owe tax to us because of the additional pay day. If any of your payees are concerned about the possible shortfall in amounts withheld, they can ask you to withhold additional amounts as shown below:
Weekly earnings*
|
Additional withholding per pay
|
$700 to $1,549
|
$3
|
$1,550 to $3,449
|
$4
|
$3,450 and over
|
$9
|
Fortnightly earnings*
|
Additional withholding per pay
|
$1,390 to $2,999
|
$12
|
$3,000 to $6,799
|
$16
|
$6,800 and over
|
$36
|
* These amounts are based on 2012-13 tax rates.
A schedule detailing the additional amounts to withhold to cover any shortfall is included in:
Payee requests
Your payee's request to have additional amounts withheld in accordance with the tables above should be in writing but can be in any format that suits your business. For example, email requests could be used or you may design a paper or computer-based form for the purpose.
If any of your payees want to increase the amounts withheld in addition to those outlined in the tables above, they must provide you with these forms:
What can you do?
If your payees will receive an additional pay during the year, we encourage you to:
- inform them about this issue
- put processes in place so they can request additional amounts to be withheld as shown in the tables above.
Fortnightly pay
|
$3,200
|
amounts withheld per pay
amounts withheld 26 pays
amounts withheld 27 pays
|
$770
$20,020
$20,790
|
Annual pay (26 pays)
|
$83,200
|
tax payable
less amounts withheld
refund
|
$19,979
$20,020
$41
|
Annual pay (27 pays)
|
$86,400
|
tax payable
less amounts withheld
amount to be paid
|
$21,211
$20,790
$421
|
* For a normal, 26 fortnight year, the payee would receive a refund of $41 on assessment of their tax return. In a 27 fortnight year, they would face a bill for $421, which would be the tax payable on assessment.
This example uses 2012-13 tax rates. It assumes the payee has no other income or deductions and is not entitled to leave loading.
For more information:
Last Modified: Monday, 2 July 2012