• Claiming tax offsets

    If your payee chooses to claim their entitlement to a tax offset through reduced withholding, they must provide you with a Withholding declaration.

    To work out the payees annual tax offset entitlement into a weekly value, use the Ready reckoner for tax offsets. Deduct the weekly amount from the amount shown in column 2 of the Withholding look-up tool (XLSX, 55.8KB)This link opens in a new window.

    If you pay your payee monthly or quarterly, use the following to calculate the relevant tax offset amount:

    • monthly – 8.3% of the amount claimed at the tax offsets question on the Withholding declaration, rounded to the nearest dollar
    • quarterly – 25% of the amount claimed at the tax offsets question on the Withholding declaration, rounded to the nearest dollar.

    Do not allow for any tax offsets if any of the following apply:

    • when a payee is not claiming the tax free threshold
    • you are using foreign resident rates
    • when a payee does not provide you with their TFN.

    Example

    An employee with full Medicare levy exemption has weekly earnings of $563 and, if using column 2, the amount to be withheld is $40.

    The employee claims a tax offset entitlement of $1,000 on their Withholding declaration.

    Using the Ready reckoner for tax offsets, the weekly value is $19.

    The total amount to be withheld is worked out as follows:

    • Amount to be withheld on $563 = $40.00
    • less weekly offset value - $19.00

    Total amount to be withheld - $21.00

    End of example

    Ready reckoner for tax offsets

    Tax offset entitlement - weekly value

    Amount claimed
    $

    Weekly value
    $

    1

    -

    2

    -

    3

    -

    4

    -

    5

    -

    6

    -

    7

    -

    8

    -

    9

    -

    10

    -

    20

    -

    30

    1.00

    40

    1.00

    50

    1.00

    57

    1.00

    60

    1.00

    70

    1.00

    80

    2.00

    90

    2.00

    100

    2.00

    200

    4.00

    300

    6.00

    338

    6.00

    400

    8.00

    500

    10.00

    600

    11.00

    700

    13.00

    800

    15.00

    850

    16.00

    900

    17.00

    1000

    19.00

    1100

    21.00

    1173

    22.00

    1200

    23.00

    1300

    25.00

    1400

    27.00

    1500

    29.00

    1600

    30.00

    1700

    32.00

    1750

    33.00

    1800

    34.00

    1900

    36.00

    2000

    38.00

    2500

    48.00

    2535

    48.00

    3000

    57.00

    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: 16 Sep 2016QC 50010