Working out the Medicare levy adjustment

If you make payments to your payee on a monthly or quarterly basis, you will need to convert their payments into weekly earnings. For more information, refer to Working out the monthly or quarterly withholding amounts. For payments made on a fortnightly basis refer to Fortnightly tax table with no and half Medicare levy.

How you work out the Medicare levy adjustment varies depending on the number of dependent children your payee is claiming, refer to either:

• Payee claiming spouse and/or one to five dependent children
• Payee with more than five dependent children

Payee claiming spouse and/or one to five dependent children

Input the payee's weekly earnings into the Medicare levy adjustment to half levy look-up tool (XLSX, 56KB)This link will download a file as per instructions in the tool. Find the corresponding amount of Medicare levy adjustment from the appropriate number of children column.

Payee with more than five dependent children

How you work out the Medicare levy adjustment for a payee with more than five dependent children varies depending on the weekly earnings of the payee, refer to:

• Weekly earnings less than $1,025
• Weekly earnings of $1,025 or more but less than the column B amount that corresponds to the number of dependent children claimed
• Weekly earnings of $1,025 or more and greater than the column B amount but less than the column A amount that corresponds to the number of dependent children claimed

Weekly earnings less than $1,025

Use the ‘5 children’ column. Disregard any cents. Input the payee's weekly earnings into the Medicare levy adjustment to half levy look-up tool (XLSX, 56KB)This link will download a file as instructed. Find the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.

Weekly earnings of $1,025 or more but less than the column B amount that corresponds to the number of dependent children claimed

Round the weekly earnings down to the nearest dollar and add 99 cents. Take 1% of that amount and round to the nearest dollar.

Weekly earnings of $1,025 or more and greater than the column B amount but less than the column A amount that corresponds to the number of dependent children claimed

Complete steps 1 to 4 below:

1. Take 1% of the relevant column B amount. Round the result to the nearest cent.
2. Take 4% of the difference between the weekly earnings (round down to the nearest dollar plus 99 cents) and the column B amount. Round the result to the nearest cent.
3. Subtract the result of step 2 from step 1.
4. Round the result to the nearest dollar.

Using a formula

The Medicare levy adjustments shown in this table can be expressed in a mathematical form.

If you have developed your own payroll software package, you will need to refer to Statement of formulas for calculating amounts to be withheld.