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  • 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 or 3 of the Withholding lookup tool (XLSX 33KB)This link will download a file.

    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 $821 and, if using column 2, the amount to be withheld is $89.

    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 $82 = $89.00
    • less weekly offset value − $19.00

    Total amount to be withheld = $70.00

    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

    40

    1

    50

    1

    57

    1

    60

    1

    70

    1

    80

    2

    90

    2

    100

    2

    200

    4

    300

    6

    338

    6

    400

    8

    500

    10

    600

    11

    700

    13

    800

    15

    850

    16

    900

    17

    1,000

    19

    1,100

    21

    1,173

    22

    1,200

    23

    1,300

    25

    1,400

    27

    1,500

    29

    1,600

    30

    1,700

    32

    1,750

    33

    1,800

    34

    1,900

    36

    2,000

    38

    2,500

    48

    2,535

    48

    3,000

    57

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

    Example

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

    = $8 + $0 + $0

    = $8

    Therefore, reduce the amount to be withheld from weekly payments by $8.

    End of example
    Last modified: 13 Oct 2020QC 63813