Calculating fortnightly or monthly withholding amounts
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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First calculate the weekly equivalent of fortnightly or monthly 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.
Then calculate fortnightly or monthly 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.
- 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.
Using a formula
The withholding amounts shown in this table can be expressed in a mathematical form.
You should read this section with Statement of formulas for calculating amounts to be withheld (NAT 1004).
If you have developed your own payroll software package, you can use the following formulas and the coefficients outlined below.
The formulas comprise linear equations of the form y = ax – b, where:
Rounding of withholding amounts
Withholding amounts calculated as a result of applying the formulas are rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar.
If no TFN is provided, ignore cents when you calculate withholding amounts.
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Software written in accordance with the formulas should be tested for accuracy against the withholding amounts obtained using the Withholding look-up tool. You should only use such software if it produces the exact same amounts.
Last modified: 01 Jul 2014QC 39432