If you want to know the amount of tax you will be liable for over the full year, refer to Individual income tax rates.
Your payer must withhold tax from the total amount they pay you, which includes any allowances, unless they have been given written approval not to do so.
Higher Education Loan Program
From 1 January 2005, the Higher Education Loan Program (HELP) was introduced, replacing the Higher Education Contribution Scheme (HECS). If the Australian Government lends you money under any of the schemes below you will have a HELP debt.
- HECS - HELP - for eligible students enrolled in Commonwealth supported places. A HECS-HELP loan will cover all or part of their student contribution.
- FEE-HELP - for eligible fee-paying students enrolled at an approved higher education provider or Open Universities Australia. FEE-HELP provides students with a loan to cover all or part of their tuition fees up to the FEE-HELP lifetime loan limit.
- OS-HELP - for eligible Commonwealth supported students who wish to study overseas. OS-HELP provides students with a cash loan to cover expenses such as accommodations and travel.
- VET FEE-HELP - for eligible students undertaking vocational education and training (VET) accredited diploma, advanced diploma, graduate diploma and graduate certificate courses with an approved VET provider. VET FEE-HELP provides students with a a loan to cover all or part of their tuition fees up to the FEE-HELP lifetime limit.
- SA-HELP - for eligible students enrolled in a course of study with a higher education provider. SA-HELP provides students with a loan to cover the fee charged by higher education providers for student services and amenities of a non-academic nature such as sporting activities, financial, employment and career advice, child care and food services.
You will be required to start repaying your HELP debt through the tax system when your repayment income is above the minimum threshold for compulsory repayment. For current thresholds and rates, refer to HELP and HECS repayment thresholds and rates.
Labour hire arrangements
Labour hire arrangements commonly involve at least two contracts:
- A user of labour (the client) typically contracts with a labour hire firm for the provision of labour of a specified kind - the labour hire firm does not contract to perform the work.
- The labour hire firm contracts with the worker and pays the worker. The worker is not an employee of the client and there is no contract between the worker and the client. The worker may or may not be an employee of the labour hire firm.
Under a labour hire arrangement, the labour hire firm will be required to withhold amounts from a payment made to the worker (at the normal salary or wages rates) and provide the worker with a PAYG payment summary - business and personal services income (NAT 72545) following the end of the financial year.
If you are entitled to be paid a leave loading at any time during the financial year, the amount of tax withheld from each pay is slightly higher than if you are not entitled to leave loading.
Medicare levy variation
Most Australian residents are liable for the Medicare levy of 1.5% of taxable income. If you are exempt from the levy, or entitled to pay a reduced levy, and want to have the amount withheld from your pay reduced to reflect that, you should complete a Medicare levy variation declaration (in addition to a Tax file number declaration).
You may also wish to complete a Medicare levy variation declaration if you either:
- want to claim an exemption from HELP repayments because of low family income
- are liable for the Medicare levy surcharge and want the amount withheld from your pay to cover the surcharge.
A payer is a person (including a company, partnership or other entity) making the following types of payments:
- salary, wages, allowances, bonuses and leave loading paid to employees
- director's fees
- salary and allowances paid to office holders (for example, Defence Force members, police officers and judges)
- payments to a worker under a labour hire arrangement
- specified payments (for example, payments to performing artists in specific circumstances)
- compensation, sickness or accident pay that is calculated at a periodical rate and made because a person is unable to work (unless the payment is made under an insurance policy to the policy owner)
- payments to individuals under a voluntary agreement.
You should receive a PAYG payment summary from your payer (for example, your employer) if you received payments during the income year from which they withheld tax. This includes income earned from part-time or casual jobs.
Payers also report to us the details of all the payment summaries they issue during the year. We use these reports in our income matching program.
Student Financial Supplement Scheme (SFSS) - Financial Supplement debt
The Student Financial Supplement Scheme (SFSS) was a voluntary loan scheme for tertiary students to help cover their expenses while they study. In the fifth year after a loan is taken out, we take responsibility for collecting the balance of the outstanding loan, which becomes an accumulated Financial Supplement debt.
The SFSS closed on 31 December 2003 and no new loans have been issued. Existing Financial Supplement debts will continue to be collected through the tax system.
You must start repaying your Financial Supplement debt through the tax system when your income is above the minimum threshold for compulsory repayments. For the 2012-13 income year, the minimum threshold is $49,096.
Tax file number declaration
Your payer will ask you to complete a Tax file number declaration. This form asks you to quote your tax file number as well as provide other information that assists your payer to calculate the amount of tax to withhold from your pay and send to us.
If you do not provide a tax file number, your payer will be required to withhold tax at the top marginal rate, including Medicare (currently 46.5%).
If you are paid under a voluntary agreement, you are not required to complete a tax file number declaration.
If you are an Australian resident, you do not pay tax on the first $18,200 of your income (this is called the 'tax-free threshold').
If you are certain that your total income from all sources will be more than the tax-free threshold you can only claim the tax-free threshold from one payer at a time. If you are certain that your total income for the year from all sources will be less than the tax-free threshold, you can claim the tax free threshold from all of your payers.
In some situations, the amount of tax your payer is required to withhold will either lead to you getting a large refund at the end of the financial year or will not be enough to cover your tax liability, so that your assessment is a large bill. To avoid this, you can apply for a withholding variation.
A PAYG voluntary agreement is a written agreement between you and your payer to bring payments for work or services into the PAYG withholding system. You must be an individual who has an Australian business number (ABN) and the payments must not be subject to any other PAYG withholding. If you do not meet these requirements, you are not eligible to enter into a voluntary agreement.
Under the voluntary agreement, the payer will withhold an amount from payments it makes to the worker and send amounts withheld to us.
If you receive income that is subject to a voluntary agreement to withhold, you do not need to include this income in your instalment income for the purposes of paying PAYG instalments.
If you wish to use your entitlement to tax offsets to reduce the amount of tax withheld from each pay, you will need to complete a Withholding declaration as well as a Tax file number declaration. You also use a Withholding declaration to inform your payer of changes to your:
You can also use this form to ask your payer to withhold an extra amount from your pay.
If you have any questions or need more information about calculating the amount to be withheld, you can contact us:
- by phoning
- 13 28 66 for general advice on business tax including PAYG, goods and services tax (GST) and fringe benefits tax (FBT) enquiries or to order forms or publications
- 13 28 61 for general advice for individuals including deductions for work expenses
- 13 28 61 for HELP and Financial Supplement debt enquiries
- in person by visiting one of our shopfronts.
Last Modified: Thursday, 23 August 2012