• Fortnightly levy adjustment

    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

    Multiply rounded weekly levy adjustment by two.

    Example

    Payee’s fortnightly earnings are $1,395.52 and the number of children claimed at question 12 is one. Scale 2 is applied.

    Equivalent weekly earnings = $1,395.52 ÷ 2
    = $697.76
    x = 697.99

    WFT = ([3,007 × 1] + 32,743) ÷ 52
    = 687.5000 or $687.50 (rounded to the nearest cent).

    SOP = (687.50 × 0.1) ÷ 0.0850
    = 808.8235 or $808 (ignoring cents).

    As x is greater than WFT and less than SOP, formula (3) is used:

    WLA = (687.50 × 0.0150) – ([697.99 – 687.50] × 0.0850)
    = 9.4209 or $9.00 (rounded to the nearest dollar).

    The fortnightly levy adjustment is therefore $18.00 ($9.00 x 2)

    End of example

    Monthly levy adjustment

    Multiply rounded weekly levy adjustment by 13 and divide the result by three. The result should be rounded to the nearest dollar.

    Example

    Payee’s monthly earnings are $2,080.33 and has a spouse but no children. Scale 2 is applied.

    Equivalent weekly earnings = (2,080.33 + 0.01) × 3 ÷ 13
    = $480.08
    x = 480.99
    WFT = $629.67

    As x is greater than $464 and less than WFT, formula (2) applies:

    WLA = 480.99 × 0.0150 = 7.2149 or $7.00 (rounded to the nearest dollar).

    The monthly adjustment is therefore $30.00 ($7.00 × 13 ÷ 3, rounded to the nearest dollar).

    End of example

    Quarterly levy adjustment

    Multiply rounded weekly levy adjustment by 13

    General examples

    Example 1

    Payee’s weekly earnings are $950.45. Payee has completed a Tax file number declaration claiming the tax-free threshold. The payee has also provided a Medicare levy variation declaration with five children shown at question 12.
    Therefore, scale 2 is applied.
    x = 950.99

    Weekly withholding amount (y)

    = (a × x) – b
    = (0.3427 × 950.99) – 165.4424
    = 160.4619 or $160.00 (rounded to nearest dollar)

    Levy adjustment: weekly earnings are greater than WFT ($918.81) and less than the SOP ($1,080) appropriate to payee with five children. Formula (3) applies.

    = (918.81 × 0.0150) – ([950.99 – 918.81] × 0.0850)
    = 13.7822 – 2.7353
    = 11.0469 or $11.00 (rounded to nearest dollar)

    Net weekly withholding amount

    $160.00 – $11.00 = $149.00

    Example 2

    Payee’s fortnightly earnings are $1,110.30. Payee resides in zone B, has provided a Tax file number declaration that claims the tax-free threshold and a Withholding declaration that claims zone and tax offsets at the tax offsets questions that totals $1,645. The payee has also lodged a Medicare levy variation declaration claiming a full exemption from the Medicare levy. Therefore, scale 5 is applied.

    Convert to weekly equivalent

    = (1,110.30 ÷ 2)
    = 555.15 or $555 (ignore cents)
    x = 555.99

    Weekly withholding amount (y)

    = (a × x) – b
    = (0.1900 × 555.99) – 67.4635
    = 38.1746 or $38.00 (rounded to nearest dollar)

    Fortnightly withholding amount

    $38.00 × 2 = $76.00

    Tax offsets claimed at the tax offsets questions on the Withholding declaration  

    = 3.8% of $1,645
    = 62.5100 or $63.00 (rounded to nearest dollar)

    Net fortnightly withholding amount

    $76.00 – $63.00 = $13.00.

    Example 3

    Payee’s monthly earnings are $3,630.33. Payee has provided a Tax file number declaration claiming the tax-free threshold and claimed a total tax offset of $1,365 at the tax offsets question on the Withholding declaration. The payee has one child but is not eligible for a Medicare levy adjustment. The weekly equivalent of the payee’s earnings exceeds the Medicare levy SOP of $808 appropriate to a payee with one child.
    Therefore, scale 2 is applied.

    Convert to weekly equivalent
    = ($3,630.33 + 0.01) × 3 ÷ 13
    = 837.7708 or $837 (ignore cents)

    x = 837.99

    Weekly withholding amount (y)
    = (a × x) – b
    = (0.3427 × 837.99) – 165.4424
    = 121.7368 or $122.00 (rounded to nearest dollar)

    Monthly withholding amount
    $122.00 × 13 ÷ 3 = $528.67 or $529.00 (rounded to nearest dollar)

    Tax offset claimed
    = 8.3% of $1,365
    = 113.2950 or $113.00 (rounded to nearest dollar)

    Net monthly withholding amount
    $529.00 – $113.00 = $416.00.

    End of example
    Last modified: 17 Jun 2014QC 25920