• Tax offsets

    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

    The withholding amount calculated using scales 2, 5 or 6 of the formulas is reduced as follows:

    • weekly – 1.9% of the total amount claimed at the tax offsets questions on the Withholding declaration (NAT 3093), rounded to the nearest dollar
    • fortnightly – 3.8% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar
    • monthly – 8.3% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar
    • quarterly – 25% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar.

    Medicare levy adjustment

    A Medicare levy adjustment is not allowed where withholding amounts have been calculated using scales 1, 3, 4 or 5. The amount obtained using scales 2 or 6 (after allowing for any tax offsets) is reduced by any amount of Medicare levy adjustment applicable.

    What if a payee is entitled to an adjustment?

    A payee who has lodged both a completed Withholding declaration and a Medicare levy variation declaration (NAT 0929), may be entitled to a Medicare levy adjustment if they have weekly earnings of one of the following:

    • $395 or more where scale 2 is applied
    • $629 or more where scale 6 is applied.

    To claim the adjustment, the payee must answer yes to question 10 on the Medicare levy variation declaration and yes to question 9, and/or question 12 on the Medicare levy variation declaration.

    How do you calculate the Medicare levy adjustment?

    To calculate the Medicare levy adjustment, your software package will need to be able to distinguish those payees who have answered yes to question 9 and no to question 12 on the Medicare levy variation declaration.

    Where payees have answered yes to question 12, the software must be able to store the number of dependants shown at this question on the declaration.

    You will need to calculate the weekly family threshold and shading out point (SOP) before calculating the weekly levy adjustment for payees with weekly earnings of one of the following:

    • $464 or more where scale 2 is applied
    • $740 or more where scale 6 is applied
    Attention

    Values used in the calculations on this page may be regarded as variables.

    End of attention
    Last modified: 17 Jun 2014QC 25920