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
Input the payee's weekly earnings into the Medicare levy adjustment to half levy lookup tool (XLSX 34KB)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 $1,080
Use the ‘5 children’ column. Disregard any cents. Input the payee's weekly earnings into the Medicare levy adjustment to half levy lookup tool (XLSX 34KB)This link will download a file as instructed. Find the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.
Weekly earnings of $1,080 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.
Example:
The employee has weekly earnings of $1,121.29 and is claiming seven dependent children. Take 1% of $1,121.99 (weekly earnings of $1,121 rounded down to the nearest dollar plus 99 cents). The amount of the Medicare levy adjustment is $11.00, rounded to the nearest dollar.
End of exampleWeekly earnings of $1,080 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:
- Take 1% of the relevant column B amount. Round the result to the nearest cent.
- 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.
- Subtract the result of step 2 from step 1.
- Round the result to the nearest dollar.
Example:
The employee has weekly earnings of $1,347.89 and is claiming eight dependent children.
- 1% × $1,283.42 (column B amount for eight children)
= $12.83
- 4% × ($1,347.99 − $1.283.42)
= 4% × $64.57
= $2.58
- $12.83 − $2.58
= $10.25
- $10.00 ($10.25 rounded to the nearest dollar).
Therefore, the Medicare levy adjustment is $10.00.
End of exampleUsing 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.
Last modified: 13 Oct 2020QC 63813