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  • How to work out the withholding amount

    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

    To work out the amount you need to withhold, you must:

    1. Add any allowances and irregular payments that are to be included in this week’s pay to the normal weekly earnings, ignoring any cents.
    2. Input the amount from step 1 into the Withholding look-up toolThis link opens in a new window, as per instructions in the tool.
    3. Use the appropriate column to find the correct amount to withhold. If your payee is
      • claiming the tax-free threshold, use column 2
      • not claiming the tax-free threshold, use column 3.
       
    4. If your payee has an end-of-year entitlement to a tax offset, use the Ready reckoner for tax offsets to convert the payee’s estimate of their full-year entitlement into a weekly offset value. Then subtract this value from the withholding amount found in step 3.
    5. If your payee is entitled to make an adjustment for the Medicare levy, subtract the value of the adjustment, determined from the Medicare levy adjustment weekly tax table (NAT 1010) from the amount found in step 4.
    6. If your payee has advised you of a HELP or FS debt, add the amount determined from the HELP weekly tax table including formulas for calculating monthly withholding (NAT 2173) or SFSS weekly tax table including formulas for calculating monthly withholding (NAT 3306) to the amount you calculated in step 5.
    Attention

    Do not allow for any tax offsets or Medicare levy adjustment if any of the following apply:

    • you use column 3
    • you use foreign resident tax rates

    when your payee has not provided you with their TFN.

    End of attention

    Example

    A payee has weekly earnings of $563.60.

    To work out the correct amount to withhold, ignore cents, input $563 into the Withholding look-up tool.

    If the payee is:

    • claiming the tax-free threshold, use column 2 to find the correct amount to withhold ($48).
    • not claiming the tax-free threshold, use column 3 to find the correct amount to withhold ($148).
    End of example

    What if there are 53 pay periods in a financial year?

    In some years, you may pay your payees 53 times instead of the usual 52. As this table 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 table below.

    Weekly earnings
    $

    Additional withholding
    $

    700 to 1549

    3

    1,550 to 3,449

    4

    3,450 and over

    9

    What if you pay monthly?

    To work out the amount to withhold from monthly payments:

    1. Work out the monthly gross earnings. Where this amount ends in 33 cents, add one cent.
    2. Multiply the monthly gross earnings by 12.
    3. Divide this figure by 52 to obtain the weekly gross amount (ignore any cents).
    4. Input the weekly gross amount into the Withholding look-up tool to find the withholding amount.
    5. Multiply this withholding amount by 52 and then divide by 12 to obtain the monthly withholding figure.

    Example

    A payee has monthly earnings of $2,250.39

    1. Gross monthly earnings are $2,250.39
    2. $2,250.39 × 12 = $27,004.68
    3. $27,004.68 ÷ 52 = $519.32
      ($519 ignoring cents)
    4. Amount using column 2 on $519 is $39.00
    5. $39 × 52 = $2,028.00
      $2,028 ÷ 12 = $169.00 withholding for the month.
    End of example

    Find out more

    Monthly withholding table (NAT 1007)

    End of find out more

    What if you pay quarterly?

    To work out the amount to withhold from quarterly payments:

    1. Multiply the quarterly gross earnings by 4.
    2. Divide this figure by 52 to obtain the weekly gross amount (ignore any cents).
    3. Use the appropriate column to find the withholding amount.
    4. Multiply this withholding amount by 52 and then divide by 4 to obtain the quarterly withholding figure.

    Example

    A payee has quarterly earnings of $21,526.48

    Gross quarterly earnings are $21,526.48
    21,526.48 × 4 = $86,105.92

    $86,105.92 ÷ 52 = $1,655.88
    ($1,655 ignoring cents)

    Amount using column 2 on $1,655 is $406.00

    $406 × 52 = $21,112.00
    $21,112 ÷ 4 = $5,278 withholding for the quarter.

    End of example

    Resident income tax rates from 1 July 2012 (not including Medicare levy)

    Taxable income range
    $

    Tax rate
    %

    0 to 18,200

    0

    18,201 to 37,000

    19

    37,001 to 80,000

    32.5

    80,001 to 180,000

    37

    Greater than 180,000

    45

    Ready reckoner for tax offsets

    Amount claimed
    $

    Weekly Value
    $

    Monthly Value
    $

    1

    -

     

    2

    -

     

    3

    -

     

    4

    -

     

    5

    -

     

    6

    -

     

    7

    -

    1.00

    8

    -

    1.00

    9

    -

    1.00

    10

    -

    1.00

    20

    -

    2.00

    30

    1.00

    2.00

    40

    1.00

    3.00

    50

    1.00

    4.00

    57

    1.00

    5.00

    60

    1.00

    5.00

    70

    1.00

    6.00

    80

    2.00

    7.00

    90

    2.00

    7.00

    100

    2.00

    8.00

    200

    4.00

    17.00

    300

    6.00

    25.00

    338

    6.00

    28.00

    400

    8.00

    33.00

    500

    10.00

    42.00

    600

    11.00

    50.00

    700

    13.00

    58.00

    800

    15.00

    66.00

    850

    16.00

    71.00

    900

    17.00

    75.00

    1000

    19.00

    83.00

    1100

    21.00

    91.00

    1173

    22.00

    97.00

    1200

    23.00

    100.00

    1300

    25.00

    108.00

    1400

    27.00

    116.00

    1500

    29.00

    125.00

    1600

    30.00

    133.00

    1700

    32.00

    141.00

    1750

    33.00

    145.00

    1800

    34.00

    149.00

    1900

    36.00

    158.00

    2000

    38.00

    166.00

    2250

    43.00

    187.00

    2500

    48.00

    208.00

    3000

    57.00

    249.00

    If the exact tax offset amount claimed is not shown in the ready reckoner, add the values for an appropriate combination.

    Example

    Tax offsets of $422 claimed. For a weekly value add values of $400, $20 and $2 from the weekly value column.

    = $8.00 + $0.00 + $0.00

    = $8.00

    Therefore, reduce the amount to be withheld from weekly payments by $8.00.

    End of example
    Last modified: 14 Jun 2013QC 25921