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Payments to employees

Tax file number declarations and withholding declarations help you work out the tax to withhold when paying employees.

Last updated 4 April 2017

If you need to withhold amounts from payments to employees, including those who are overseas or foreign residents, you need to get them to complete a Tax file number declaration. In some cases they may also need to complete a Withholding declaration.

These declarations will help you to work out how much tax to withhold by indicating whether there are other factors you need to consider, such as withholding where employees:

  • are under 18 years of age
  • have study and training support loans such as Higher Education Loan Program (HELP), Trade Support Loan (TSL) or Financial Supplement debts
  • are claiming tax offsets.

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As well as wages and salary, you must also withhold amounts from other payments you make to employees.

The easiest way to work out how much tax to withhold is to use our online tax withheld calculator or the tax tables.

New employees must complete a tax file number (TFN) declaration. They may also complete a withholding declaration.

You may need to withhold tax when making advance annual or long service leave payments to employees you keep employing.

Payers need to know the correct withholding for allowances and the differences between allowances and reimbursements.

A payee may request a variation to increase or decrease the amount of tax you withhold from payments you make to them.

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