Tax withheld calculator
Tax withheld calculator
If you are an employer or another withholding payer, the TWC helps you work out the tax you need to withhold from payments you make to employees and other workers.
To use the TWC, you need the information your workers supply in their:
The TWC takes into account the:
- income tax rates
- Medicare levy
- Student Financial Supplement Scheme (SFSS) contributions
- Higher Education Loan Programme (HELP) contributions
- worker's residency status
- tax-free threshold
- tax offset entitlements.
From 1 July 2012, the temporary flood and cyclone reconstruction levy (flood levy) no longer applies.
The online version of the Tax withheld calculator (TWC) is effective from 1 July 2012 and applies to payments made in the 2012-13 income year.
From 1 July 2012 the downloadable version of TWC is no longer available.
To use the TWC online, choose one of the following calculators:
Links to the online TWC previously saved to your computer favourites list may no longer work for the 2012-13 version of the TWC. You may need to re-save the TWC to your favourites list.
How to use the TWC
The payee's name field is optional, but you may find it useful if you want to print the result.
You can find the answers to the questions in this section in the payee's:
- Tax file number declaration (NAT 3092)
- Withholding declaration (NAT 3093).
You can find the answers to the Medicare levy questions in the payee's Medicare levy variation declaration (NAT 0929). If the payee has not completed a Medicare levy variation declaration, you can ignore the Medicare levy variation questions.
If your payee has an accumulated HELP debt or a financial supplement debt, you may need to withhold additional amounts from their payments. Your payee will need to notify you of this on their Tax file number declaration or Withholding declaration. The TWC will include any additional amounts for HELP or SFSS in the withholding amount if they apply.
When you have completed all questions, select the appropriate period of payment (weekly, fortnightly, monthly or quarterly) and select the Calculate button. The calculator will then display the:
- payee's gross earnings
- amount you must withhold
- payee's net pay.
We only use the details you enter for the calculation and they are not retained for any purpose by us.
In some years, you may pay your payees 53 times instead of the usual 52. As the weekly calculation in the TWC is based on 52 pays, the extra pay may result in insufficient amounts being withheld. You should let your payees know when this occurs so if they are concerned about a shortfall, they can ask you to withhold the additional amount in the following table.
53 weekly pays
Extra tax per week
$700 to $1,549
$1,550 to $3,449
$3,450 and over
In some years, you may pay your payees 27 times instead of the usual 26. As the fortnightly calculation in the TWC is based on 26 pays, the extra pay may result in insufficient amounts being withheld. You should let payees know when this occurs so if they are concerned about a shortfall, they can ask you to withhold the additional amounts in the table below.
27 fortnightly pays
Extra tax per fortnight
$1,390 to $2,999
$3,000 to $6,799
$6,800 and over
There is no longer a separate withholding scale for payees who are entitled to leave loading.
If you pay leave loading as a lump sum, you now need to use Tax table for back payments, commissions, bonuses and similar payments (NAT 3348) to calculate withholding.
If you pay leave loading on a pro rata basis, then add the leave loading payment to the earnings for the period. That is, instead of the one lump sum payment, you make multiple payments during the year when leave is being taken. The TWC will calculate the withholding amount.
Payments of salary, wages, commissions, bonuses or allowances made after the death of the employee are not subject to withholding. Even if the income was earned before the death of the payee, you are not required to withhold an amount.
Terms we use
The following is a list of terms we use in the TWC and their meanings:
You must apply foreign resident withholding rates where a payee has declared they are not an Australian resident on their:
Select 'No' at the question 'Australian Resident?' on the calculator if this applies to your payee.
To work out whether the payee is an Australian resident for tax purposes, refer to Residency - what you need to know.
The rate of withholding is either the payee's Commissioner's instalment rate (CIR) or a flat rate of 20%.
If the payee:
- has a CIR of more than 20%, you must withhold at the payee's CIR
- has a CIR of 20% or less, you must withhold at the flat rate of 20% unless the payee and you agree to use the CIR
- does not know their CIR at the time of the agreement, you must withhold at the flat rate of 20%.
It is the payee's responsibility to tell you their CIR in their voluntary agreement.
We can provide forms or you can develop your own voluntary agreement, providing it contains the information we need.
Gross earnings include:
- the payee's normal earnings
- any allowances and irregular payments you will add.
Enter the total amount at the 'Gross earnings' question on the calculator. Do not include cents, unless the payment is a monthly amount.
The HELP has replaced the Higher Education Contribution Scheme (HECS). If a student defers all or part of their HELP debt, they must repay the debt.
The SFSS was a voluntary loan scheme for tertiary students to help cover their expenses while they study. Five years after the student took out the loan, we become responsible for collecting the outstanding loan. At this stage, the loan becomes an accumulated financial supplement debt.
Clients make compulsory repayments of accumulated financial supplement and HELP debts through the tax system when their repayment income is above the minimum threshold. The amount they repay increases as their income increases.
You may need to withhold extra amounts for payees with an accumulated financial supplement or HELP debt under the pay as you go (PAYG) withholding system. The extra amounts cover any compulsory repayment included on their income tax notice of assessment.
The Tax file number declaration and Withholding declaration include the following questions:
- 'Do you have an accumulated Higher Education Loan Program (HELP) debt?'
- 'Do you have an accumulated financial supplement debt?'.
If they have answered 'Yes' to one or both of these questions, then you should answer 'Yes' to the equivalent questions on the calculator:
- 'Does the payee have an accumulated Higher Education Loan Program (HELP) debt'
- 'Does the payee have an accumulated financial supplement debt?'
Prescribed persons may claim an exemption from, or variation to, the Medicare levy.
Prescribed persons include:
- repatriation and Centrelink pension or benefits recipients
- members of the Australian Defence Force (ADF).
To claim the Medicare levy variation available to some low-income earners with dependants, a payee must lodge a Medicare levy variation declaration (NAT 0929) along with their withholding declaration.
If the payee has lodged both of these forms, you must complete questions under 'Medicare Levy Variation' on the calculator. Enter the number of children the payee has claimed. For payees claiming a spouse only, enter '0' (zero).
If the resident payee has not given you a valid tax file number declaration quoting their tax file number (TFN) or one of the exemptions below (see Tax file number exempt), you must withhold 46.5% (45% for foreign residents) from the total gross payment, including:
- the whole amount of all leave loading payments
- payments on termination of employment - that is, holiday pay, unused annual leave and long service leave
- the taxable part of an employment termination payment.
Tax file number exempt
The payee is exempt from quoting a TFN if any of the following apply:
- they are under 18 years of age and earn less than $18,200 per year
- they are receiving certain Centrelink pensions, benefits or allowances or a service pension from the Department of Veterans' Affairs - however, they must quote their TFN if they receive Newstart, sickness allowance, special benefit or partner allowance
- they have told you they lodged a TFN application or enquiry with us less than 28 days ago
- they have an interim notice we issued which is still in force.
If the payee is an Australian resident for tax purposes, $18,200 of their yearly income is not taxed. This is called the tax-free threshold.
From 1 July 2012, payees who are certain that their total income for the year from all sources will be less than $18,200 can claim the tax-free threshold from all their payers.
Foreign residents cannot claim the tax-free threshold.
If the payee has claimed the tax-free threshold on the TFN declaration, select 'Yes' at 'Tax-free threshold claimed?' in the calculator.
Tax offsets reduce tax payable and are spread over the whole year in weekly instalments.
If a payee is entitled to a tax offset, you withhold less from their pay. A payee can claim tax offsets only if they are also claiming the tax-free threshold.
If your payee chooses to claim their entitlement to a tax offset through reduced withholding, they must provide you with a Withholding declaration. Enter the amount the payee shows at the tax offsets question on the Withholding declaration at the 'Tax offsets' question on the calculator.
You cannot use the TWC for the seniors and pensioners tax offset tax rate calculation.
To learn more about the TWC, email us at TWC-FEEDBACK@ato.gov.au
To learn more about the correct tax amount to withhold:
- refer to the current PAYG withholding Tax tables
- if you are an
- individual, phone us on 13 28 61
- employer or another payer, phone us on 13 28 66.
You can also refer to our rates, calculators and tools.
To provide feedback about the TWC, complete our feedback form.
Last Modified: Thursday, 16 August 2012