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  • PAYG withholding tax table - bonuses and similar payments

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    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    You can download this publication in Portable Document Format (PDF): download Tax table for bonuses and similar payments (NAT 7905, PDF, 98KB).

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    Who should use this table?

    You should use this table if you make a bonus or similar payment to a payee.

    Bonus payment

    This refers to payments usually made to an employee in recognition of performance or services and may be calculated as a percentage of the proceeds of the particular business transaction. These payments may not be related to a particular period of work.

    Other similar payments

    This refers to payments that are amounts of a one-off nature which do not relate to work performed in a particular period. Examples of these types of payments include:

    • a once only allowance payment made to an employee as compensation for a changed work location that is further away from their home, or
    • an amount paid as a sign-on bonus to a worker entering a workplace agreement.

    Any payments that are considered back payments of salary or wages are not covered by this table. Payers making back payments should refer to Tax table for back payments (NAT 3348) to work out the amount to withhold.

    How to work out the amount to withhold

    If the bonus or similar payment relates to work performed in a single pay period

    Where the bonus or similar payment relates to work performed in a single pay period (for example, one week or one month) the amount is added to all other earnings for the current period. An amount should then be withheld in accordance with the normal pay as you go (PAYG) withholding tax tables.

    If the bonus or similar payment relates to multiple pay periods

    Where a bonus or similar payment relates to a period in excess of one pay period or is paid on an irregular basis, you should work out the correct amount to withhold using the steps below.

    1. Use the relevant tax table to work out the amount to withhold from the payee's normal earnings for one pay period.
    2. Divide the bonus or similar payment by the number of pay periods to which it relates.
    3. Disregard any cents. For example, $1.75 becomes $1. If the result is nil, there is no amount to withhold on the bonus or similar payment.
    4. Add the amount in step 3 to the normal earnings amount for a single period.
    5. Use the same tax table used in step 1 to determine the amount to withhold on the combined payment amount calculated at step 4.
    6. Subtract the amount worked out in step 1 from the amount worked out in step 5.
    7. Multiply the result by the number of pay periods to which the bonus relates.
    Attention

    If the payment is a one-off payment and does not relate to a particular pay period or relates to a number of pay periods in excess of 12 months, for the purposes of this table the payment is treated as being paid over a 12 month period.

    End of attention

    Examples

    The following examples use Weekly tax table - incorporating Medicare levy with and without leave loading (NAT 1005) effective from 1 July 2004. The calculations are made using column 3, with tax-free threshold and no leave loading.

    Example one

    An employee, whose weekly wage for the current period is $383.75, receives an end of year bonus of $45. As the bonus relates to the full year of work, it equates to 52 weekly pay periods.

    Step

    Method

    Result

    1

    Use the tax table to work out the withholding on $383

    $52

    2

    Divide the bonus by the number of pay periods to which it relates - that is, $45   52

    $0.86

    3

    As the amount calculated in step 2 is less than $1, you do not need to withhold an amount. There is no need to calculate any further steps.

    $0

    The total withholding on the payment of normal weekly pay of $383 plus the bonus of $45 is $52 (that is, $52 + $0).

    Example two

    A company relocating premises pays an employee who is required to travel further to work, a relocation payment of $520. Their weekly wage is $750. As the payment is one-off and does not relate to a particular pay period, the payment is spread over 52 weeks.

    Step

    Method

    Result

    1

    Use the tax table to work out the withholding on $750

    $164

    2

    Divide $520 by 52

    $10

    3

    Disregard any cents

    $10

    4

    Add this to the normal weekly wage of $750

    $760

    5

    Use the tax table to work out the withholding on $760

    $167

    6

    Subtract the amount in step 1 from the amount in step 5

    $3

    7

    Multiply this amount by the number of pay periods - that is, $3 x 52

    $156

    The total withholding on the payment of normal weekly pay of $750 plus the relocation payment of $520 is $320 (that is, $164 + $156).

    More information

    Further Information

    For more information or questions relating to PAYG withholding and bonuses or similar payments, or for general PAYG withholding information, phone us on 13 28 66.

    All PAYG withholding tax tables and other PAYG publications are also available.

    End of further information
    Last modified: 14 Sep 2012QC 27561