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  • Schedule 1 – Statement of formulas for calculating amounts to be withheld

    Attention

    For payments made on or after 1 July 2014 to 30 June 2015.

    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(TAA). It applies to withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), and 12-D of Schedule 1 to the TAA.

    End of attention

    Using this schedule

    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

    If you develop your own payroll software package, this schedule will help you calculate the amounts to be withheld from payments made on a weekly, fortnightly, monthly or quarterly basis.

    Payments include:

    • salary, wages, allowances and leave loading paid to employees
    • paid parental leave to an eligible worker
    • director’s fees
    • salary and allowances paid to office holders (including members of parliament, statutory office holders, defence force members and police officers)
    • payments to labour hire workers
    • payments to religious practitioners
    • government pensions
    • government education or training payments
    • compensation, sickness or accident payments that are calculated at a periodical rate and made because a person is unable to work (unless the payment is made under an insurance policy to the policy owner).

    Coefficients for calculation of amounts to be withheld (withholding amounts) from weekly payments

    Where the tax-free threshold is not claimed in Tax file number declaration – Scale 1

    Weekly earnings
    (x) less than
    $

    a

    b

    45

    0.1900

    0.1900

    361

    0.2321

    1.8961

    932

    0.3477

    43.6900

    1188

    0.3450

    41.1734

    3111

    0.3900

    94.6542

    3111 & over

    0.4900

    405.8080

    Where the employee claimed the tax-free threshold in Tax file number declaration – Scale 2

    Weekly earnings
    (x) less than
    $

    a

    b

    355

    -

    -

    395

    0.1900

    67.4635

    493

    0.2900

    106.9673

    711

    0.2100

    67.4642

    1282

    0.3477

    165.4431

    1538

    0.3450

    161.9815

    3461

    0.3900

    231.2123

    3461 & over

    0.4900

    577.3662

    Foreign residents –Scale 3

    Weekly earnings
    (x) less than
    $

    a

    b

    1538

    0.3250

    0.3250

    3461

    0.3700

    69.2308

    3461 & over

    0.4700

    415.3846

    Where a tax file number (TFN) was not provided by employee –Scale 4

    Earnings

    Tax rate

    Resident
    $1 & over

    0.4900

    Foreign resident
    $1 & over

    0.4700

    Where the employee claimed the FULL exemption from Medicare levy in Medicare levy variation declaration –Scale 5

    Weekly earnings
    (x) less than
    $

    a

    b

    355

    -

    -

    711

    0.1900

    67.4635

    1282

    0.3277

    165.4423

    1538

    0.3250

    161.9808

    3461

    0.3700

    231.2115

    3461 & over

    0.4700

    577.3654

    Where the employee claimed the HALF exemption from Medicare levy in Medicare levy variation declaration –Scale 6

    Weekly earnings
    (x) less than
    $

    a

    b

    355

    -

    -

    660

    0.1900

    67.4635

    711

    0.2400

    100.5087

    826

    0.3777

    198.4875

    1282

    0.3377

    165.4429

    1538

    0.3350

    161.9813

    3461

    0.3800

    231.2121

    3461 & over

    0.4800

    577.3660

    Notes

    1. If you have 27 fortnightly, or 53 weekly pays in a financial year, refer to withholding additional amounts from employee earnings.
    2. Scales 1, 2, 3, 5 and 6 may be applied only where employees have provided their TFN.
    3. For scale 4 no coefficients are necessary. To calculate withholding, apply the tax rate to earnings, ignoring any cents in earnings and in the withholding result.
    4. Scale 1 and 2 apply whether or not the employee is entitled to any leave loading.
    5. Tax offsets may be allowed only where scales 2, 5 or 6 are applied.
    6. All scales include the Temporary Budget Repair Levy.
    7. Scale 1, 2, 4 and 6 incorporate the Medicare levy. Scale 4 incorporates the Medicare levy for residents only.
    8. For scale 2 no Medicare levy is payable by a person whose taxable income for the year is $20,542 ($395 per week) or less. Where the taxable income exceeds $20,542 but is less than $25,677 ($493 per week), the levy is shaded in at the rate of 10% of the excess over $20,542. Where a person’s taxable income is $25,677 ($493 per week) or more, Medicare is levied at the rate of 2% of total taxable income.
    9. The Medicare levy is also shaded in for scale 6. The Medicare levy parameters for scales 2 and 6 are as follows:

    Medicare levy parameters

     

    Scale 2
    OLD*

    Scale 2
    NEW

    Scale 6
    OLD

    Scale 2
    New

    Weekly earnings threshold

    395

    395

    629

    660

    Weekly earnings shade-in threshold

    464

    493

    740

    826

    Medicare levy family threshold

    32743

    34367

    32743

    34367

    Weekly family threshold divisor

    52

    52

    52

    52

    Additional child

    3007

    3156

    3007

    3156

    Shading out point multiplier

    0.1000

    0.1000

    0.0500

    0.0500

    Shading out point divisor

    0.0850

    0.0800

    0.0425

    0.0400

    Weekly levy adjustment factor

    395.0400

    395.0400

    629.6700

    660.9000

    Medicare levy

    0.0150

    0.0200

    0.0075

    0.0100

    About this schedule

    Amounts to be withheld from payments made weekly, fortnightly, monthly and quarterly, as set out in the relevant PAYG withholding tax table, can be calculated using the formulas and coefficients contained in this schedule.

    Separate formulas apply to:

    • employees who have not claimed the tax-free threshold
    • foreign residents
    • employees claiming a full exemption from Medicare levy
    • employees claiming a half exemption from Medicare levy
    • employees who have claimed the tax-free threshold.

    Using a formula

    The formulas comprise linear equations of the form y = ax – b, where:

    • y is the weekly withholding amount expressed in dollars
    • x is the number of whole dollars in the weekly earnings plus 99 cents
    • a and b are the values of the coefficients for each set of formulas for each range of weekly earnings (or, in the case of fortnightly, monthly or quarterly earnings, the weekly equivalent of these amounts).

    The formulas relate only to the calculation of withholding amounts before any tax offsets and Medicare levy adjustments are allowed. For instructions on the treatment of tax offsets and Medicare levy adjustments, refer to Tax offsets and Medicare levy adjustments.

    For sample data to verify that the software program is calculating the correct withholding amounts and Medicare levy adjustments, see Withholding amounts and Medicare levy adjustments.

    Attention

    Withholding amounts calculated using these formulas may vary slightly to those calculated using the method set out in the footnote to the appropriate PAYG withholding tax table. This applies if earnings exceed $3,275 weekly or $6,550 fortnightly.

    End of attention

    Rounding of withholding amounts

    Withholding amounts calculated as a result of applying the above formulas are rounded to the nearest dollar. Values ending in 50 cents are rounded to the next higher dollar. Do this rounding directly – that is, do not make a preliminary rounding to the nearest cent.

    Use these rounding rules across all scales except scale 4 (where employee does not provide a TFN). For scale 4, cents are ignored when applying the tax rate to earnings and when withholding amounts are calculated.

    When there are 53 pay periods in a financial year

    In some years, you may have 53 pay periods instead of the usual 52. As this schedule is based on 52 pays, the extra pay may result in insufficient amounts being withheld. You should let your employees know when this occurs so if they are concerned about a shortfall in tax withheld, they can ask you to withhold the additional amount in the table below.

    Weekly earnings
    $

    Additional withholding
    $

    725 to 1524

    3

    1,525 to 3,449

    4

    3,450 and over

    10

    When there are 27 pay periods in a financial year

    In some years, you may have 27 pay periods instead of the usual 26. As this schedule is based on 26 pays, the extra pay may result in insufficient amounts being withheld. You should let employees know when this occurs so if they are concerned about a shortfall in tax withheld, they can ask you to withhold the additional amounts in the table below.

    Fortnightly earnings
    $

    Additional withholding
    $

    1,400 to 3,049

    12

    3,050 to 6,799

    17

    6,800 and over

    42

    Working out the weekly earnings

    The method of working out the weekly earnings (x) for the purpose of applying the formulas is as follows:

    Example

    Weekly income

    $367.59

    Add allowance subject to withholding

    $ 9.50

    Total earnings (ignore cents)

    $377.00

    Add 99 cents

    $0.99

    Weekly earnings

    $377.99

     

    End of example

    Calculating withholding fortnightly, monthly or quarterly amounts

    First calculate the weekly equivalent of fortnightly, monthly or quarterly earnings. If you pay:

    • fortnightly – divide the sum of the fortnightly earnings and the amount of any allowances subject to withholding by two. Ignore any cents in the result and then add 99 cents.
    • monthly – obtain the sum of the monthly earnings and the amount of any allowance subject to withholding (if the result is an amount ending in 33 cents, add one cent), multiply this amount by three and then divide by 13. Ignore any cents in the result and then add 99 cents.
    • quarterly – divide the sum of the quarterly earnings and the amount of any allowances subject to withholding by 13. Ignore any cents in the result and then add 99 cents.

    Then calculate fortnightly, monthly or quarterly withholding amounts as follows:

    • fortnightly – work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by two (for more information, refer to Tax offsets).
    • monthly – work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by 13, divide the product by three and round the result to the nearest dollar.
    • quarterly – work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by 13.
    Last modified: 19 Jun 2014QC 39407