• Schedule 30 – Tax table for back payments, commissions, bonuses and similar payments

    Attention

    For payments made on or after 1 July 2013 to 30 June 2014

    This tax table replaces PAYG withholding tax table – commission payments and Tax table for bonuses and similar payments.

    New withholding limit

    There is a new withholding limit of 46.5% on tax withheld from any additional payments calculated using an annualised method.

    Applying this withholding limit may result in withholding not being sufficient to cover some employees' end of year tax liability. In these situations, an employee can complete a Withholding declaration – upwards variation (NAT 5367) to increase their withholding for the remainder of the financial year.

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    Attention

    This document is a withholding schedule made by the Commissioner of Taxation in accordance with sections 15-25 and 15-30 of schedule 1 to the Taxation Administration Act 1953. It applies to certain withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), 12-C (except sections 12-85 and 12-90) and 12-D of schedule 1 paid as a lump sum.

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    Who should use this table?

    Attention

    Warning:

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

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    Use this table if you make a payment of salary or wages that includes any of the following additional amounts:

    • a back payment (including lump sum payments in arrears)
    • a commission
    • a bonus or similar payment.

    What other payments should you use this tax table for?

    These payments include:

    • compensation or sickness or accident payments for an incapacity for work that are not tax exempt
    • Australian Government education or training payments – for example, Austudy or ABSTUDY
    • assessable pensions, benefits and allowances under the Social Security Act 1991 or the Veterans’ Entitlements Act 1986, or similar payments made under a law of a foreign country, state or province.

    What are back payments (including lump sums in arrears)?

    A back payment is a payment that was meant to have been made in a prior period. For example:

    • your payee’s wages were underpaid due to you not correctly applying an industrial agreement
    • an allowance you were due to pay in July was overlooked and you made the payment in December.

    A back payment is distinct from a bonus, which is a payment made for recognition of performance including past performance. A bonus (or similar payment) can only be considered a back payment if you paid the bonus later than the time that it should have been paid.

    If you normally process payments in a pay period later than the work is performed, for example, overtime payments paid with a time lag of one pay period, they are not considered back payments. These payments are treated as part of the normal pay cycle when paid and withholding is calculated on total earnings for that period. An overtime payment is only be considered a back payment if it was meant to have been made in a prior pay period.

    What are commissions?

    Commissions are typically payments made as recognition of performance or service, and may be calculated as a percentage of the proceeds from a particular transaction or series of transactions.

    What are bonuses and similar payments?

    A bonus is usually made to a payee in recognition of performance or services, and may be calculated as a percentage of the proceeds from a particular business transaction. These payments may not necessarily be related to a particular period of work.

    A payment will be treated as similar to a bonus if it is an amount of a one-off nature that does not relate to work performed in a particular period. Examples include:

    • a once-only payment made to a payee as compensation for a changed work location
    • an amount paid as a sign-on bonus to a payee entering a workplace agreement
    • any lump sum allowance.

    Leave loading

    Payment of leave loading can also be regarded as a payment similar to a bonus, if it is made as a lump sum and not on a pro rata basis as leave is taken. If you pay leave loading on a pro rata basis, add it to earnings for the period to calculate withholding using the standard tax tables.

    Last modified: 29 Oct 2013QC 34732