LI 2024/18

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Taxation Administration Act 1953

Legislative Instrument

I, Emma Rosenzweig, Deputy Commissioner of Taxation, make the following instrument.

1 Name

This instrument is the Taxation Administration (Withholding Schedules) Instrument 2024.

2 Commencement

(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3 Authority

This instrument is made under section 15-25 in Schedule 1 to the TAA.

4 Definitions

In this instrument:

ATO means the Australian Taxation Office.

Quick code means an alphanumeric code beginning with 'QC' that can be used to navigate to a specific page on the ATO website, by typing the code into the website search bar.

Note: The ATO website is www.ato.gov.au. This instrument contains quick code references to help people to navigate to specific pages on that website.

TAA means the Taxation Administration Act 1953.

5 Repeals

(1) The whole of the Taxation Administration Withholding Schedules 2023 is repealed.

(2) The whole of the Taxation Administration Act 1953 - Pay as you go withholding - Tax table for additional amounts to withhold as a result of an agreement to increase withholding is repealed.

6 Schedules

The Schedules to this instrument contain withholding schedules that specify the amounts, formulas and procedures to be used for working out the amount to be withheld by an entity from a withholding payment covered by Subdivision 12-B, 12-C or 12-D in Schedule 1 to the TAA. Each item in a Schedule has effect according to its terms.

7 Guide to Schedules

The Schedules to this instrument deal with the matters specified in the following table and can be found on the ATO website using the corresponding quick code.

8 Guide to other relevant documents and links

The Schedules to this instrument refer to other documents or links in italics that are specified in the following table and can be found on the ATO website using the corresponding quick code.

Schedule 1 - Statement of formulas for calculating amounts to be withheld

This schedule applies to withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), and 12-D of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

About this schedule

Amounts to be withheld from payments made weekly, fortnightly, monthly and quarterly, as set out in the relevant PAYG withholding tax table at ato.gov.au/taxtables, can be calculated using the formulas and coefficients contained in this schedule.

Using this schedule

If you develop your own payroll or accounting software package, this schedule provides the formulas and coefficients you will need to calculate the amounts to be withheld from payments made on a weekly, fortnightly, monthly or quarterly basis.

Separate scales apply to:

•

foreign residents

•

employees who have claimed or not claimed the tax-free threshold

•

employees claiming a full or half-exemption from the Medicare levy.

To assist employers who don't have a software package, our website ato.gov.au provides the following tools which are based on the formulas in this schedule:

•

tax withheld calculator

•

tax tables.

Payments covered include:

•

salary, wages, allowances and leave loading paid to employees

•

paid parental leave

•

directors' fees

•

salary and allowances paid to office holders (including members of parliament, statutory office holders, defence force members and police officers)

•

payments to labour-hire workers

•

payments to religious practitioners

•

government pensions

•

government education or training payments

•

compensation, sickness or accident payments that are calculated at a periodical rate and made because a person is unable to work (unless the payment is made under an insurance policy to the policy owner).

Do not use this schedule for payments made to individuals employed under a working holiday makers visa. You must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including lump sum payments.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the 'Sample data' section in this schedule.

The results obtained when using the coefficients in this schedule may differ slightly from the sums of the amounts shown in the PAYG tax tables at ato.gov.au/taxtables. The differences result from the rounding of components. Withholding calculated using either method is accepted.

Other statements of formulas

Statements of formulas for other classes of payees are also available. These include:

•

Schedule 8 - Statement of formulas for calculating study and training support loans components

•

Schedule 2 - Tax table for individuals employed in the horticultural or shearing industry

•

Schedule 3 - Tax table for actors, variety artists and other entertainers

•

Schedule 9 - Tax table for seniors and pensioners

•

Schedule 15 - Tax table for working holiday makers.

Coefficients for calculation of amounts to be withheld (withholding amounts) from weekly payments

Where the tax-free threshold is not claimed in Tax file number declaration - Scale 1

Where the employee claimed the tax-free threshold in Tax file number declaration - Scale 2

Foreign residents - Scale 3

Where a tax file number (TFN) was not provided by employee - Scale 4

Where the employee claimed the FULL exemption from Medicare levy in Medicare levy variation declaration - Scale 5

Where the employee claimed the HALF exemption from Medicare levy in Medicare levy variation declaration - Scale 6

Notes

1. Scale 1 contains a negative value for one of the b coefficients. This is intentional.

2. If you have 27 fortnightly, or 53 weekly pays in a financial year, refer to withholding additional amounts from employee earnings section.

3. Scales 1, 2, 3, 5 and 6 may be applied only where employees have provided their TFN.

4. For scale 4 no coefficients are necessary. To calculate withholding, apply the tax rate to earnings, ignoring any cents in earnings and in the withholding result.

5. Scale 1 and 2 apply whether or not the employee is entitled to any leave loading.

6. Tax offsets may be allowed only where scales 2, 5 or 6 are applied.

7. Scale 1, 2, 4 and 6 incorporate the Medicare levy. Scale 4 incorporates the Medicare levy for residents only.

8. For scale 2 no Medicare levy is payable by a person whose taxable income for the year is $26,000 ($500 per week) or less. Where the taxable income exceeds $26,000 but is less than $32,500 ($625 per week), the levy is shaded in at the rate of 10% of the excess over $26,000. Where a person's taxable income is $32,501 ($625 per week) or more, Medicare is levied at the rate of 2% of total taxable income.

9. The Medicare levy is also shaded in for scale 6. The Medicare levy parameters for scales 2 and 6 are as follows:

Medicare levy parameters

Using a formula

Overview

The formulas comprise linear equations of the form y = ax - b, where:

•

y is the weekly withholding amount expressed in dollars

•

x is the number of whole dollars in the weekly earnings plus 99 cents

•

a and b are the values of the coefficients for each set of formulas for each range of weekly earnings (or, in the case of fortnightly, monthly or quarterly earnings, the weekly equivalent of these amounts - see 'Working out the weekly earnings').

The formulas relate only to the calculation of withholding amounts before any tax offsets and Medicare levy adjustments are allowed. For instructions on the treatment of tax offsets and Medicare levy adjustments, refer to the sections on 'Tax offsets' and 'Medicare levy adjustment' in this schedule.

Sample data to verify that the software program is calculating the correct withholding amounts and Medicare levy adjustments has been provided in this schedule.

Withholding amounts calculated using these formulas may vary slightly to those calculated using the method set out in the footnote to the appropriate PAYG withholding tax table at ato.gov.au/taxtables. This applies if earnings exceed $3,400 weekly or $6,800 fortnightly.

Rounding of withholding amounts

Withholding amounts calculated as a result of applying the above formulas are rounded to the nearest dollar. Values ending in 50 cents are rounded to the next higher dollar. Do this rounding directly - that is, do not make a preliminary rounding to the nearest cent.

Use these rounding rules across all scales except scale 4 (where employee does not provide a TFN). For scale 4, cents are ignored when applying the tax rate to earnings and when withholding amounts are calculated.

When there are 53 pays in a financial year

In some years, you may have 53 pays instead of the usual 52. As this schedule is based on 52 pays, the extra pay may result in insufficient amounts being withheld. You should let your employees know when this occurs so if they are concerned about a shortfall in tax withheld, they can ask you to withhold the additional amount in the table below.

Extra withholding amount, 53 pays

When there are 27 pays in a financial year

In some years, you may have 27 pays instead of the usual 26. As this schedule is based on 26 pays, the extra pay may result in insufficient amounts being withheld. You should let employees know when this occurs so if they are concerned about a shortfall in tax withheld, they can ask you to withhold the additional amounts in the table below.

Extra withholding amount, 27 pays

Working out the weekly earnings

The method of working out the weekly earnings (x) for the purpose of applying the formulas is as follows:

Calculating withholding fortnightly, monthly or quarterly amounts

First calculate the weekly equivalent of fortnightly, monthly or quarterly earnings. If you pay:

•

fortnightly - divide the sum of the fortnightly earnings and the amount of any allowances subject to withholding by two. Ignore any cents in the result and then add 99 cents.

•

monthly - obtain the sum of the monthly earnings and the amount of any allowances subject to withholding (if the result is an amount ending in 33 cents, add one cent), multiply this amount by three and then divide by 13. Ignore any cents in the result and then add 99 cents.

•

quarterly - divide the sum of the quarterly earnings and the amount of any allowances subject to withholding by 13. Ignore any cents in the result and then add 99 cents.

Then calculate fortnightly, monthly or quarterly withholding amounts as follows:

•

fortnightly - work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by two.

•

monthly - work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by 13, divide the product by three and round the result to the nearest dollar.

•

quarterly - work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by 13.

Bi-monthly payments

For payers who make bi-monthly payments, obtain the sum of payments made for the month. Then calculate withholding using the monthly steps outlined above. Divide the monthly withholding amount by two to determine the bi-monthly withholding amount.

Tax offsets

The withholding amount calculated using scales 2, 5 or 6 of the formulas is reduced as follows:

•

weekly - 1.9% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar

•

fortnightly - 3.8% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar

•

monthly - 8.3% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar

•

quarterly - 25% of the total amount claimed at the tax offsets questions on the Withholding declaration, rounded to the nearest dollar.

Medicare levy adjustment

A Medicare levy adjustment is not allowed where withholding amounts have been calculated using Scales 1, 3, 4 or 5. The amount obtained using Scales 2 or 6 (after allowing for any tax offsets) is reduced by any amount of Medicare levy adjustment applicable.

When an employee is entitled to an adjustment

To claim the Medicare levy adjustment (available in certain situations), your employee must lodge a Medicare levy variation declaration with their Tax file number declaration.

Some employees may be liable for an increased rate of the Medicare levy surcharge as a result of the income for surcharge purposes tests. They can lodge a Medicare levy variation declaration, asking you to increase the amount to be withheld from their payments.

An employee who has lodged both a completed Tax file number declaration and a Medicare levy variation declaration may be entitled to a Medicare levy adjustment if they have weekly earnings of one of the following:

•

$500 or more where scale 2 is applied

•

$843 or more where scale 6 is applied.

To claim the adjustment, the employee must answer yes to question 10 and yes to question 9, and/or question 12 on the Medicare levy variation declaration.

Calculating the Medicare levy adjustment

To calculate the Medicare levy adjustment, your software package will need to be able to distinguish those employees who have answered yes to question 9 and no to question 12 on the Medicare levy variation declaration.

Where employees have answered yes to question 12, the software must be able to store the number of dependants shown at this question on the declaration.

You will need to calculate the weekly family threshold and shading out point (SOP) before calculating the weekly levy adjustment for employees with weekly earnings of one of the following:

•

$625 or more where Scale 2 is applied

•

$1,053 or more where Scale 6 is applied.

Values used in the calculations may be regarded as variables.

Weekly family threshold (WFT)

Where scale 2 or scale 6 is applied

•

Where an employee has answered yes to question 9 and no to question 12 on the Medicare levy variation declaration:

WFT = $843.19 (43,846 ÷ 52) (rounded to the nearest cent).

•

Where an employee has answered yes to question 12 on the Medicare levy variation declaration, you need to:

a.

multiply the number of children shown at question 12 by 4,027 and add the result to 43,846

b.

divide the result of (a) by 52

c.

round the result of (b) to the nearest cent.

Shading out point (SOP)

The SOP relative to an employee's WFT is calculated as follows:

Multiply WFT by 0.1 and divide the result by 0.0800. Ignore any cents in the result.

Weekly levy adjustment (WLA)

Where Scale 2 is applied

Where weekly earnings are $500 or more but less than the SOP, the WLA is derived by applying the weekly earnings (x) expressed in whole dollars plus an amount of 99 cents (refer to the section 'Working out the weekly earnings' in this schedule), in the following formulas:

1.

If x is less than $625, WLA = (x - 500) × 0.1

2.

If x is $625 or more but less than WFT, WLA = x × 0.0200

3.

If x is equal to or greater than WFT and less than the SOP, WLA = (WFT × 0.0200) - ([x - WFT] × 0.0800)

Where Scale 6 is applied

Where weekly earnings are $843 or more but less than the SOP, the WLA is derived by applying the weekly earnings (x) expressed in whole dollars plus an amount of 99 cents (refer to the section 'Working out the weekly earnings' in this schedule), in the following formulas:

1.

If x is less than $1,053, WLA = (x - 843.19) × 0.05

2.

If x is $1,053 or more but less than WFT, WLA = x × 0.0100

3.

If x is equal to or greater than WFT and less than the SOP, WLA = (WFT × 0.0100) - ([x - WFT] × 0.0400)

In each case, WLA should be rounded to the nearest dollar.

Values ending in 50 cents should be rounded to the next higher dollar.

Examples

Fortnightly levy adjustment

Multiply rounded weekly levy adjustment by two.

Monthly levy adjustment

Multiply rounded weekly levy adjustment by 13 and divide the result by three. The result should be rounded to the nearest dollar.

Quarterly levy adjustment

Multiply rounded weekly levy adjustment by 13.

General examples

Calculating withholding amounts for payments made on a daily or casual basis

The withholding amounts shown in the Tax table for daily and casual workers can be expressed in a mathematical form, using the formulas and coefficients provided.

To work out withholding amounts using the formulas:

1.

Multiply earnings (ignoring any cents) by five to work out the weekly equivalent. Add 99 cents to the result.

2.

Calculate the weekly amount by applying the coefficients at Scale 2 where an employee is claiming the tax-free threshold. (The employee must have claimed the tax-free threshold to use the Tax table for daily and casual workers.)

3.

Round the result to the nearest dollar.

4.

Divide this amount by five to convert it to the daily equivalent.

5.

Round the daily withholding amount to the nearest dollar.

Where the employee is entitled to the seniors and pensioners tax offset, replace with the appropriate coefficients from Schedule 9 - Tax table for seniors and pensioners.

Sample data

Withholding amounts

Weekly withholding amounts

Amounts to be withheld, weekly

Fortnightly withholding amounts

Amounts to be withheld, fortnightly

Monthly withholding amounts

Amounts to be withheld, monthly

Medicare level adjustment - Scale 2

Weekly Medicare levy adjustment

Adjustment amount, weekly

Fortnightly Medicare levy adjustment

Adjustment amount, fortnightly

Monthly Medicare levy adjustment

Adjustment amount, monthly

Medicare half-levy adjustment - Scale 6

Weekly Medicare half-levy adjustment

Adjustment amount, weekly half-levy

Fortnightly Medicare half-levy adjustment

Adjustment amount, fortnightly half-levy

Monthly Medicare half-levy adjustment

Adjustment amount, monthly half-levy

Employee declarations

Tax file number (TFN) declarations

The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer/employee relationship, you must complete a Tax file number declaration with all available details of the employee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee, (ignoring any cents) if all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If an employee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the employee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) unless we tell you not to.

Do not allow for any tax offsets or Medicare levy adjustments. Do not withhold any amount for study and training support loans.

When your employee is a foreign resident

If your employee has answered that they are a foreign resident on their Tax file number declaration, you will need to use the foreign resident tax rates.

There are two ways you can withhold from a foreign resident's earnings:

•

If they have given you a valid TFN, use Scale 3

•

If they have not given you a valid TFN, use Scale 4.

Foreign residents cannot claim tax offsets to reduce withholding. If your foreign resident employee has claimed a tax offset on the Withholding declaration, don't make any adjustments to the amount you withhold.

Withholding declarations

An employee may use a Withholding declaration to advise you of a tax offset they choose to claim through reduced withholding from you.

Employees can also use a Withholding declaration to advise you of any changes to their situation that may affect the amount you need to withhold from their payments.

Changes that may affect the amount you need to withhold include:

•

becoming or ceasing to be an Australian resident for tax purposes

•

claiming or discontinuing a claim for the tax-free threshold

•

advising of a HELP, VSL, FS, SSL or AASL debt, or changes to them

•

entitlement to a seniors and pensioners tax offset.

When your employee provides you with a Withholding declaration it will take effect from the next payment you make. If you receive an updated declaration from an employee, it will replace the previous one.

An employee must have provided you with a valid Tax file number declaration before they can provide you with a Withholding declaration.

Claiming tax offsets

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

To work out the employee's annual tax offset entitlement into a weekly, fortnightly, monthly or quarterly amount, refer to the section on 'Tax offsets' in this schedule.

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

•

where no tax-free threshold is claimed

•

you are using foreign resident rates

•

when an employee does not provide you with their TFN.

When your employee has a study and training support loan debt

If your employee has a HELP, VSL, FS, SSL or AASL debt, you may need to withhold additional amounts from their payments. Your employee will need to notify you of this on their Tax file number declaration or Withholding declaration.

Next step:

To calculate additional withholding amounts for:

•

HELP, VSL, FS, SSL or AASL debts, refer to either:

-

Study and training support loans weekly tax table

-

Study and training support loans fortnightly tax table

-

Study and training support loans monthly tax table

•

Statement of formulas, refer to Schedule 8 - Statement of formulas for calculating study and training support loans components.

Employees who are entitled to a reduction of Medicare levy, or do not have to pay the Medicare levy because of low family income, will not have to make a compulsory HELP, VSL, FS, SSL or AASL repayment for that year. The exemption from making a compulsory study and training support loans repayment may be claimed on the Medicare levy variation declaration.

Allowances, leave and other payments

Allowances

Generally, allowances are added to normal earnings and the amount to withhold is calculated on the total amount of earnings and allowances.

For more information on when to withhold and report on allowances, refer to Withholding for allowances.

Leave loading

If you pay leave loading as a lump sum, use Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments to calculate withholding.

If you pay leave loading on a pro-rata basis, add the leave loading payment to earnings for that period to calculate withholding.

Holiday pay, long service leave and employment termination payments

Employees who continue working for you

You must include holiday pay (including any leave loading) and long service leave payments as part of normal earnings, except when they are paid on termination of employment.

For more information, see Withholding from leave payments for continuing employees.

Employees who stop working for you

This schedule does not cover any lump sum payments made to an employee who stops working for you.

If an employee has unused annual leave, leave loading or long service leave, refer to Schedule 7 - Tax table for unused leave payments on termination of employment.

Any other lump sum payments may be employment termination payments, refer to Schedule 11 - Tax table for employment termination payments.

Do not withhold any amount for study and training support loans debt from lump sum termination payments.

Schedule 2 - Tax table for individuals employed in the horticultural or shearing industry

This schedule applies to withholding payments covered by section 12-35 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make payments to individuals in the horticultural industry who:

•

work in any process associated with the production, cultivation or harvest of a horticultural crop

•

perform the process on the grower's property

•

do not work for the same grower for a continuous period exceeding six months

•

have given you a valid Tax file number declaration and have claimed the tax-free threshold.

Also, use this schedule if you make payments to individuals in the shearing industry such as shearers, crutchers, wool classers, cooks, shed hands and pressers who:

•

have given you a valid Tax file number declaration and have claimed the tax-free threshold

•

do not work for the same employer for a continuous period exceeding six months.

For all other circumstances, use the relevant PAYG withholding weekly or fortnightly tax table at ato.gov.au/taxtables.

If you employ individuals under a working holiday makers visa, you must use Schedule 15 - Tax table for working holiday makers.

If you employ individuals under a Seasonal Worker Programme, Pacific Labour Scheme or Pacific Australia Labour Mobility scheme, this schedule does not apply.

Working out the withholding amount

To work out the amount you need to withhold you must:

1.

Input your employee's total earnings (ignoring any cents) into the Withholding lookup tool.

2.

Use the appropriate column to find the correct amount to withhold:

-

Column 2 if the resident employee has given you a TFN

-

Column 3 if the resident employee has not given you a TFN

-

Column 4 if the foreign resident employee has given you a TFN

-

Column 5 if the foreign resident employee has not given you a TFN.

Note: When using this schedule do not:

•

withhold an amount for study and training support loans, or

•

adjust the withholding amount for a payee who is claiming a Medicare levy exemption or reduction, or a tax offset.

These adjustments do not apply to this schedule.

Resident employees

The standard rate of withholding of 13% applies if an employee has given you a valid TFN and you withhold amounts using the figures shown in column 2 of the Withholding lookup tool.

If the employee has not given you a valid TFN, you must withhold amounts using the figures shown in column 3 of the Withholding lookup tool.

When your employee is a foreign resident

If your employee has answered that they are a foreign resident for tax purposes on their Tax file number declaration, you will need to use the foreign resident tax rates.

There are two ways you can withhold from a foreign resident's earnings:

•

If they have given you a valid TFN, you must withhold amounts using the figures shown in column 4 of the Withholding lookup tool.

•

If they have not given you a valid TFN, you must withhold at 45% using the figures in column 5 of the Withholding lookup tool.

Pay period

The rates in this schedule apply irrespective of the pay period.

Using a formula

The withholding amounts shown in this schedule can be expressed in mathematical form.

If you have developed your own payroll or accounting software package, use the formulas and coefficients outlined below.

The formulas comprise linear equations of the form y = ax, where:

•

y is the amount to be withheld expressed in dollars

•

x is earnings for the pay period, ignoring any cents

•

a is the value of the coefficient as shown in Table A.

Table A: Resident or foreign resident rate

Rounding of withholding amounts

The withholding amounts calculated as a result of applying the above formulas should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar. Do this rounding directly - that is, do not make a preliminary rounding to the nearest cent. Where an employee has not provided a TFN, ignore any cents in the result.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the Withholding lookup tool. The results obtained when using the coefficients in this schedule may differ slightly from the Withholding lookup tool. The differences result from the rounding of components. Withholding calculated using either method is accepted.

Tax file number (TFN) declarations

The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer-employee relationship, you must complete a Tax file number declaration with all available details of the employee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents), if all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If an employee states at question 1 of the Tax file number declaration that they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the employee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) unless we tell you not to.

Do not allow for any tax offsets or Medicare levy adjustment. Do not withhold any amount for study and training support loans.

Varying your PAYG withholding

If your employee believes that, for their circumstances, the amount you withhold will be too much, they may apply to us for a variation to reduce the amount of withholding.

Schedule 3 - Tax table for actors, variety artists and other entertainers

This schedule applies to withholding payments covered by section 12-35 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make payments to employees who are actors, variety artists or other entertainers who receive payments for their performances.

Do not use this schedule if you make payments to employees, or other individuals engaged under a contract, to perform in a promotional activity that is any one of the following:

•

conducted in the presence of an audience

•

intended to be communicated to an audience by print or electronic media

•

for a film or tape

•

for a television or radio broadcast.

For these types of payments, the Commissioner has varied the rate of withholding to 20% of the payment.

If you employ individuals under a working holiday makers visa, you must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including lump sum payments.

For all other employees who are paid on a regular basis, use the applicable tax table at ato.gov.au.

Do not use this schedule for payments made to foreign residents engaged as contractors. These payments are subject to foreign resident withholding.

When using this schedule, do NOT withhold an amount for:

•

Higher Education Loan Program (HELP) debts

•

VET Student Loan (VSL) debts

•

Financial Supplement (FS) debts

•

Student Start-up Loan (SSL) debts, or

•

Australian Apprenticeship Support Loan (AASL) debts.

When using this schedule, do NOT adjust the withholding amount for an employee who is claiming a Medicare levy exemption or reduction. Medicare levy variations do not apply to this schedule.

Working out the withholding amount

The Withholding lookup tool and tables in this schedule are only applicable to those who have three performances per week and have claimed the tax-free threshold. If the number of performances per week is different, or the employee has not claimed the tax-free threshold, use the formulas in this schedule to calculate withholding amounts.

To work out the amount you need to withhold using the Withholding lookup tool:

1.

Input the employee's daily earnings (ignoring any cents) into the Withholding lookup tool and refer to the corresponding amount to be withheld in column 2.

2.

If the employee has claimed any tax offsets, see the section 'Claiming tax offsets' in this schedule to work out the daily value of the amount claimed. Subtract the daily value of the tax offsets from the amount found in step 1.

Using a formula

The withholding amounts shown in this schedule can be expressed in a mathematical form.

If you have developed your own payroll or accounting software package, use the formulas and the coefficients outlined in Table A and Table B.

This section should be read with Schedule 1 - Statement of formulas for calculating amounts to be withheld.

The formulas comprise linear equations of the form y = ax - b where:

•

y is the weekly withholding amount expressed in dollars

•

x is the weekly earnings rounded down to whole dollars plus 99 cents, and

•

a and b are the values of the coefficient for the formulas as shown in tables A and B.

Table A: Employee has claimed the tax-free threshold

Coefficients where tax-free threshold claimed

Table B: Employee has not claimed the tax-free threshold

Coefficients where tax-free threshold not claimed

To work out withholding amounts using the formulas, you must:

1.

Ignore any cents, multiply the per performance earnings by the number of performances for the week to derive the weekly equivalent. Add 99 cents to the result.

2.

Calculate the weekly amount by applying the relevant coefficients from table A or B above, rounding to the nearest dollar.

3.

Divide this amount by the number of performances for the week to work out the per performance withholding amount. Multiply this amount by the number of performances per day to convert it to the daily earnings equivalent. Round the daily withholding amount to the nearest dollar.

If you pay your employees daily, rather than per performance, the amount to withhold (including reductions for tax offsets) should be worked out on a daily basis.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the Withholding lookup tool. The results obtained when using the coefficients in this schedule may differ slightly from the lookup tool. The differences result from the rounding of components. Withholding calculated using either method is accepted.

Tax file number (TFN) declarations

The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer-employee relationship, you must complete Tax file number declaration with all available details of the employee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents), if all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If an employee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If an employee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) unless we tell you not to.

Do not allow for any tax offsets or Medicare levy adjustment. Do not withhold any amount for study and training support loans.

When your employee is a foreign resident

If your employee has answered that they are a foreign resident for tax purposes on their Tax file number declaration, you will need to use the foreign resident tax rates.

There are two ways you can withhold from a foreign resident's earnings:

•

if they have not given you a valid TFN, you need to withhold 45% for each $1 of earnings (ignoring any cents)

•

if they have given you a valid TFN, you need to withhold the amount calculated using the foreign resident tax rates, rounding any cents to the nearest dollar.

Foreign resident tax rates

Weekly tax rates

Foreign residents cannot claim tax offsets to reduce withholding. If your foreign resident employee has claimed a tax offset on the Withholding declaration, don't make any adjustments to the amount you withhold.

Withholding declarations

Employees can use a Withholding declaration to advise you of any changes to their situation that may affect the amount you need to withhold from their payments.

Changes that may affect the amount you need to withhold include:

•

becoming or ceasing to be an Australian resident for tax purposes

•

claiming or discontinuing a claim for the tax-free threshold

•

advising of a HELP, VSL, FS, SSL or AASL debt, or changes to them.

An employee may also use a Withholding declaration to advise you of a tax offset they choose to claim through reduced withholding from you. For more information, see the section in this schedule on 'Claiming tax offsets'.

When your employee provides you with a Withholding declaration it will take effect from the next payment you make. If you receive an updated declaration from an employee, it will replace the previous one.

An employee must have provided you with a valid Tax file number declaration before they can provide you with a Withholding declaration.

Claiming tax offsets

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

If your employee claims a tax offset, reduce the amount to be withheld from their earnings per performance by the value of the tax offset. The per performance value is the tax offset amount claimed divided by 52, divided by the number of performances per week. Round the result to the nearest dollar.

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

•

when no TFN has been provided

•

you are using foreign resident rates

•

the payee has not claimed the tax-free threshold.

Schedule 4 - Tax table for return to work payments

This schedule applies to withholding payments covered by section 12-50 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you pay an individual to resume working for, or providing services to, you or any other entity.

If you employ individuals under a working holiday makers visa you must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including return to work payments.

We have a calculator to help you work out the correct amount of tax to withhold from payments to most employees.

Working out the withholding amount

To work out the amount you need to withhold, multiply the amount of the return to work payment by 32%. This rate applies to residents and non-residents.

Rounding of withholding amounts

Withholding amounts calculated should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar.

Tax file number (TFN) declarations

The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer/employee relationship, you must complete a Tax file number declaration with all available details and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) if all of the following apply:

•

they have not quoted their tax file number (TFN)

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or made an enquiry with us.

If an employee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals, they have 28 days to give you their TFN.

If the employee has not given you their TFN within 28 days, you must withhold 47% from any payment made to a resident employee and 45% from any payment made to a foreign resident employee (ignoring any cents) unless we tell you not to.

Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments

This schedule applies to certain withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), 12-C (except sections 12-85 and 12-90) and 12-D of Schedule 1 to the TAA paid as a lump sum.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make a payment of salary or wages which is:

•

a back payment (including lump sum payments in arrears)

•

a commission

•

a bonus or similar payment.

If you employ individuals under a working holiday makers visa you must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including back payments, commissions and bonuses or similar payments.

Other payments you should use this schedule for

These payments include back payments of:

•

compensation or sickness or accident payments for an incapacity for work that are not tax exempt

•

Australian Government education or training payments - for example, Austudy or ABSTUDY

•

assessable pensions, benefits and allowances under the Social Security Act 1991 or the Veterans' Entitlements Act 1986, or similar payments made under a law of a foreign country, state or province.

Back payments (including lump sums in arrears)

A back payment is a payment that was meant to have been made in a prior period. For example:

•

your employee's wages were underpaid due to an error or oversight

•

an allowance you were due to pay in July was overlooked and you made the payment in December.

A back payment is distinct from a bonus, which is a payment made for recognition of performance including past performance. A bonus (or similar payment) can only be considered a back payment if you paid the bonus later than the time that it should have been paid.

If you normally process payments in a pay period later than when the work is performed - for example, overtime payments paid with a time lag of one pay period - they are not considered back payments. These payments are treated as part of the normal pay cycle when paid and withholding is calculated on total earnings for that period. An overtime payment is only considered a back payment if it was meant to have been made in a prior pay period.

Commissions

Commissions are typically payments made as recognition of performance or service and may be calculated as a percentage of the proceeds from a particular transaction or series of transactions.

Bonuses and similar payments

A bonus is usually made to an employee in recognition of performance or services and may be calculated as a percentage of the proceeds from a particular business transaction. These payments may not necessarily be related to a particular period of work.

A payment will be treated as similar to a bonus if it is of a one-off nature that does not relate to work performed in a particular period. Examples include:

•

a once-only payment made to a payee as compensation for a changed work location

•

an amount paid as a sign-on bonus to a payee entering a workplace agreement

•

any lump sum allowance.

Leave loading

Payment of leave loading can also be regarded as a payment similar to a bonus, if it is made as a lump sum and not on a pro-rata basis as leave is taken. If you pay leave loading on a pro-rata basis, add it to earnings for the period to calculate withholding using the standard tax tables at ato.gov.au/taxtables.

Terms we use

Additional payments

Additional payments include back payments (including lump sum payments in arrears), commissions, bonuses and similar payments.

Normal earnings

Normal earnings are gross taxable earnings and include all salary and wage income, taxable allowances, and overtime earnings for the current financial year. This includes any back payments previously made using Method B(i).

At the start of a financial year, an employee's normal earnings can be based on the last full pay period worked in the previous financial year.

If an employee's pay fluctuates significantly, you can use an average of gross taxable earnings for the current financial year (or, if applicable, the previous financial year).

If an employee has no current or past normal earnings (for example, the employee is newly employed), you can include expected future earnings in your calculations. This can be based on the employee's contracted or expected salary for the financial year.

For the purposes of this table, normal earnings do not include employment termination payments or unused leave payments made on termination of employment.

Average total earnings

Average total earnings are the sum of all normal earnings paid in the current financial year, including current pay, plus any current year back payments if Method B(i) is used to calculate withholding. Then divide the total earnings by the number of pay periods to date (including the current pay period).

Pay periods per financial year

Pay periods per financial year refers to a total of 52 pay periods if paid weekly, 26 pay periods if paid fortnightly or 12 pay periods if paid monthly. No adjustments are required for a 53 week / 27 fortnight year.

Tax file number (TFN) declarations

The answers your employees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from an employee, it will override the previous one.

If an employee does not give you a valid Tax file number declaration within 14 days of starting an employer-employee relationship, you must complete a Tax file number declaration with all available details of the employee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents), if all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If an employee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the employee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) unless we tell you not to.

Do not allow for tax offsets or Medicare levy adjustment. Do not withhold any amount for study and training support loans.

Working out the withholding amount

Available methods

To work out the amount you need to withhold from an additional payment, you must use either Method A or Method B.

Using Method B is more complex but produces a withholding amount that more closely approximates the actual tax payable.

Calculations made using either method are acceptable to work out the withholding amount. If your calculation using either method results in a negative amount, treat the result as nil.

Using Method A

Use this method for any additional payments made, regardless of the financial year the additional payment applies to. This includes all back payments, commissions, bonuses or similar payments.

This method calculates withholding by apportioning additional payments made in the current pay period over the number of pay periods in a financial year and applying that average amount to the gross earnings in the current pay period.

If you are paying a commission, bonus or similar payment for a defined period of less than 12 months, you can choose to calculate withholding by using the number of pay periods the payment relates to at step 3. For example, if a commission relates to four weeks and the employee is paid weekly, you divide the commission by four pay periods at step 3, rather than 52 pay periods.

Method A instructions

Using Method B

Use Method B(i) for any back payments applied to specific periods in the current financial year.

Use Method B(ii) for either:

•

back payments that relate to a prior financial year

•

any additional payments (including commissions, bonuses or similar payments) that don't relate to a single pay period, regardless of the financial year the additional payment applies to.

If you are making back payments applying to current and previous financial years, apportion the back payment between those years and then use the applicable method for each component to calculate withholding.

If you are making multiple additional payments:

•

in the current pay period, you first need to calculate withholding on the total of any current financial year back payments (including lump sum in arrears) then calculate the withholding on any other additional payments

•

in the current financial year (that is, you made an additional payment to the employee in a previous pay period), do not recalculate the withholding for the additional payment previously made.

B(i) Back payments applied to specific periods in the current financial year

This method recalculates withholding for each pay period the back payment applies.

Method B(i) instructions

B(ii) Additional payments applied over the whole financial year

This method calculates withholding by averaging all additional payments made in the current financial year over the number of pay periods in a financial year and applying that to the average total earnings to date.

Method B(ii) instructions

Withholding limit

If your employee has a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or Australian Apprenticeship Support Loan (AASL) debt, see the section on 'Study and training support loans and additional payments' in this schedule.

If you use Method A or Method B(ii), the amount of tax to be withheld from an additional payment is limited to a maximum of 47% of the additional payment.

If the withholding amount calculated (including a study and training support loan component) using Method A or Method B(ii) exceeds 47% of the additional payment being made, then the amount is reduced to be equal to 47% of that payment. The withholding limit applies to the additional payment only and not to normal earnings for the current pay period.

For some employees, the withholding limit may result in their withholding amounts not being sufficient to cover their end-of-year tax liability, as their total earnings for the financial year may exceed the study and training support loan repayment threshold or attract a higher rate of tax. Under these circumstances, your employee can arrange an upwards variation by entering into an agreement with you to vary the rate or amount of withholding.

Commissions, bonuses or similar payments

If a commission, bonus or similar payment relates to work your employee performed for more than one pay period (or for an undefined period), calculate withholding by applying either Method A or Method B(ii).

Do not use this schedule for payments for a single pay period.

If the commission, bonus or similar payment relates to work your employee performed in a single pay period (for example, a week, a fortnight or a month) the amount is added to all their other earnings for the current period. Withholding is then calculated using the standard PAYG withholding tax tables at ato.gov.au/taxtables.

Study and training support loans and additional payments

If your employee has advised you they have a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or Australian Apprenticeship Support Loan (AASL) debt on their Tax file number declaration or Withholding declaration, you must also withhold from the additional payment using the relevant study and training support loans tax tables.

Calculate the amounts you need to withhold from additional payments for study and training support loans by using the same method you used to calculate the PAYG withholding amount from the additional payment.

For example, if you calculate the amount to be withheld from the additional payment using Method A, use the same method to calculate the amounts to be withheld for study and training support loans purposes.

How to calculate withholding on the additional payment if it is calculated separately to the study and training support loans components

If you calculate withholding separately, you need to make sure that the withholding limit in Method A and Method B(ii) applies to the combined total calculated for the additional payment and the study and training support loans components. For example, at step 9 in Method A, you must combine the amounts from the two separate calculations used for step 7 before comparing it to the amount calculated at step 8.

Next step:

You can use Schedule 8 - Statement of formulas for calculating study and training support loans components to combine PAYG withholding with study and training support loan instead of repeating the calculation separately for each component.

The results obtained when using the coefficients in the above schedule may differ slightly from the sums of the amounts shown in the PAYG tax tables. Either calculation is acceptable.

Variations

If your employee has a withholding variation in place for the current financial year, use one of the following to work out the amount of withholding from additional payments:

•

the varied rate - if the relevant income is specified in the variation notice

•

this tax table - if the relevant income is not specified in the variation notice.

If your employee had a withholding variation in place at the time the additional payment accrued but the withholding variation is no longer in effect when the additional payment is made, it does not apply when working out the amount to withhold.

Leave without pay

For the purposes of this table, any periods where your employee has taken leave without pay do not affect the calculations outlined in each of the methods.

For example, for Method A and Method B(ii), you are still required at step 3 to apportion all additional payments made by the total number of pay periods in a financial year (that is, 52 weekly pay periods, 26 fortnightly pay periods or 12 monthly pay periods).

Superannuation income streams

To work out the amount you need to withhold from the taxable component of back payments of super income streams (pensions and annuities), including lump sum payments in arrears, use either Method A or B.

End-of-year reporting

You must record back payments in a pay event when reporting under Single Touch Payroll (STP), or on your employee's or super payment recipient's payment summary if you are a non STP reporter. What payment summary you use depends on whether the back payments relate to a superannuation income stream or previous period of assessable foreign service. Use:

•

PAYG payment summary - individual non-business for all back payments except those for super income streams or if they were related to a previous period of assessable foreign service

•

PAYG payment summary - superannuation income stream for super income stream payments

•

PAYG payment summary - foreign employment for payments related to a previous period of assessable foreign service.

Note: For the purposes of the lump sum E reporting under STP or payment summaries, multiple payments are aggregated when calculating the $1,200 payment threshold.

Completing the individual non-business payment summary

For payments accrued in the current financial year, include the total:

•

gross amount of all payments at 'Gross payments'

•

amount withheld at 'Total tax withheld'.

Salary and wage income (including allowances) accrued before the current financial year

For each payment accrued in a prior financial year, but not more than 12 months before the date of payment include the total:

•

gross amount of the payment at 'Gross payments' or 'Allowances'

•

amount withheld at 'Total tax withheld'.

For each payment accrued more than 12 months before the date of payment of less than $1,200, include the total:

•

gross amount of the payment at 'Gross payments' or 'Allowances'

•

amount withheld at 'Total tax withheld'.

For each payment accrued more than 12 months before the date of payment of $1,200 or more, include the total:

•

gross amount of the payment (including allowances) at 'Lump sum E'

•

amount withheld at 'Total tax withheld'.

For each payment that accrued before and after 12 months, apportion the payment between the two periods. If the portion of the payment that accrued after 12 months from the date of payment is $1,200 or more, include the:

•

gross amount of the payment at 'Lump sum E'

•

amount withheld at 'Total tax withheld'.

Other amounts accrued before the current financial year

These other amounts are described in the section above in this schedule 'Other payments you should use this schedule for'.

For each payment accrued in a prior financial year of less than $1,200, include the total:

•

gross amount of the payment at 'Gross payments'

•

amount withheld at 'Total tax withheld'.

For each payment accrued in a prior financial year of $1,200 or more, include the total:

•

gross amount of the payment at 'Lump sum E'

•

amount withheld at 'Total tax withheld'.

Employee letter

You must also provide your employee with a letter specifying:

•

the financial years over which the amount accrued, and

•

the gross amount that accrued each financial year.

Completing the superannuation income stream payment summary

For payments accrued in the current financial year, include:

•

the component amounts at both:

-

'Taxable component' (both taxed and untaxed elements if applicable)

-

'Tax-free component'

•

the amount withheld at 'Total tax withheld'.

For payments accrued prior to the current financial year, include:

•

the component amounts at both:

-

'Lump sum in arrears - taxable component' (both taxed and untaxed elements if applicable)

-

'Lump sum in arrears - tax-free component'

•

the amount withheld at 'Total tax withheld'.

Payee letter

You must also provide your payee with a letter specifying:

•

the financial years over which the amount accrued, and

•

the gross amount that accrued each financial year.

Completing the foreign employment payment summary

Note: For the foreign employment payment summary, the gross payments amount is assessable foreign employment income, which includes total allowances.

For salary and wage payments accrued in the current financial year, include the total:

•

gross amount of all payments at 'Gross payments'

•

amount withheld and paid to a foreign tax jurisdiction (if applicable) at 'Foreign tax paid'

•

amount withheld for Australian tax purposes at 'Total Australian tax withheld'.

For each salary and wage payment accrued in a prior financial year, but not more than 12 months before the date of payment, include the total:

•

gross amount of the payment at 'Gross payments'

•

amount withheld and paid to a foreign tax jurisdiction (if applicable) at 'Foreign tax paid'

•

amount withheld for Australian tax purposes at 'Total Australian tax withheld'.

For each salary and wage payment accrued more than 12 months before the date of payment of less than $1,200, include the total:

•

gross amount of the payment at 'Gross payments'

•

amount withheld and paid to a foreign tax jurisdiction (if applicable) at 'Foreign tax paid'

•

amount withheld for Australian tax purposes at 'Total Australian tax withheld'.

For each salary and wage payment accrued more than 12 months before the date of payment of $1,200 or more, include the total:

•

gross amount of the payment at 'Lump sum E'

•

amount withheld and paid to a foreign tax jurisdiction (if applicable) at 'Foreign tax paid'

•

amount withheld for Australian tax purposes at 'Total Australian tax withheld'.

Employee letter

You must also provide your employee with a letter specifying:

•

the financial years over which the amount accrued, and

•

the gross amount that accrued each financial year.

Examples

Example 1 uses both:

•

Study and training support loans weekly tax table effective from 1 July 2024

•

Schedule 1 - Statement of formulas for calculating amounts to be withheld (containing the amounts, formulas and procedures that were last updated on 1 July 2024). The calculations are made using scale 2, with tax-free threshold.

Example 2 uses:

•

Study and training support loans weekly tax table effective from 1 July 2024

•

Schedule 1 - Statement of formulas for calculating amounts to be withheld (containing the amounts, formulas and procedures that were last updated on 1 July 2024). The calculations are made using scale 2, with tax-free threshold.

Example 3 uses Schedule 1 - Statement of formulas for calculating amounts to be withheld (containing the amounts, formulas and procedures that were last updated on 1 July 2024). The calculations are made using scale 2, with tax-free threshold.

Example 4 uses both:

•

Study and training support loans monthly tax table effective from 1 July 2024

•

Schedule 1 - Statement of formulas for calculating amounts to be withheld (containing the amounts, formulas and procedures that were last updated on 1 July 2024). The calculations are made using scale 2, with tax-free threshold.

Schedule 6 - Tax table for annuities

This schedule applies to withholding payments covered by paragraph 12-80(b) of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you pay an annuity that was purchased with non-superannuation money, for example, an initial capital investment of personal cash.

For annuities purchased using money rolled over from a super fund or super income stream payments, use Schedule 13 - Tax table for superannuation income streams.

Working out the withholding amount

To work out the withholding amount for an annuity payment purchased with non-superannuation money, you must:

1.

Work out the amount of income to withhold from using the following formula:

Annuity payment - [Deductible amount / Number of instalments]

In this formula:

•

deductible amount represents the amount of the annuity payment that is exempt from tax. This amount is calculated using the formula found in section 27H of the Income Tax Assessment Act 1936.

-

Where the annuity is held in only one person's name, the following formula is used:

(Undeducted purchase price of the annuity - Residual capital value) / Term of annuity or life expectation factor

The undeducted purchase price is generally the amount of the initial capital investment.

-

Where the annuity is held or payable to 2 or more people, the deductible amount is apportioned depending on the amount each person received.

•

number of instalments is the number of instalments of the annuity payable in the income year.

The recipient of the annuity may request the ATO to calculate the deductible amount of their annuity using Request for determination of the deductible amount of UPP of an Australian pension or annuity.

2.

Use the corresponding PAYG withholding tax table at ato.gov.au/taxtables to find the withholding amount. The tax table you use depends on the period which the annuity is paid - for example, weekly or fortnightly.

Some payees may be eligible to claim the seniors and pensioners tax offset (SAPTO). If your payee gives you a Withholding declaration indicating that they want to claim a SAPTO entitlement through PAYG withholding, use the Schedule 9 - Tax table for seniors and pensioners to work out the amount to withhold from the income amount calculated in step 1.

Rounding of withholding amounts

Withholding amounts calculated using the above formulas should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar. Do this rounding directly - that is, do not make a preliminary rounding to the nearest cent.

Examples

These examples use the PAYG withholding tax tables at ato.gov.au/taxtables that apply from 1 July 2024.

Tax file number (TFN) declarations

The answers your payees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from a payee, it will override the previous one.

If a payee does not give you a valid Tax file number declaration within 14 days of starting a payer-payee relationship, you must complete a Tax file number declaration with all available details of the payee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident payee and 45% from any payment you make to a foreign resident payee (ignoring any cents), if it is an annuity payment that is not a superannuation income stream and all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If a payee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the payee has not given you their TFN within 28 days, you must withhold 47% for any annuity payment you make to a resident payee and 45% for any annuity payment you make to a foreign resident payee (ignoring any cents) unless we tell you not to.

When a TFN has not been provided do not allow for tax offsets or Medicare levy adjustments. Do not withhold any amount for study and training support loans.

Payment summaries

You must issue a PAYG payment summary - individual non-business to the payee by 14 July following the end of the financial year in which you made payments to them. However, if your payee requests a payment summary from you during the financial year, you must provide it within 14 days of receiving their request.

Schedule 7 - Tax table for unused leave payments on termination of employment

This schedule applies to withholding payments covered by section 12-90 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you pay an amount to an employee for unused leave on the termination of their employment or office.

Unused leave payments on termination of employment or office include:

•

annual leave

•

holiday pay

•

leave loading

•

leave bonuses

•

long service leave.

Before calculating the amount to be withheld, you must work out if the payments are being made as a result of a genuine redundancy, invalidity or an early retirement scheme.

If you employ individuals under a working holiday makers visa, you must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including unused leave payments on termination of employment.

Working out the withholding amount

When a TFN is provided

The amount to withhold is calculated using the table below.

If the post-17 August 1993 lump sum payment from normal termination is less than $300, you must withhold the lesser of the following:

•

the amount worked out using the table below

•

32% of the payment.

Withholding amounts for long service leave, annual leave and annual leave loading

Rounding of withholding amounts

Withholding amounts calculated using this table are rounded to the nearest dollar. Results ending in 50 cents or higher are rounded upwards. If a TFN is not provided, ignore cents when calculating withholding amounts.

Marginal rate calculation

To work out the marginal rate, you must:

1.

Using the relevant PAYG withholding tax table at ato.gov.au/taxtables, work out the amount to withhold from your employee's normal gross earnings for a regular pay period.

2.

Divide the amount of the payment by the number of normal pay periods in 12 months (12 monthly payments, 26 fortnightly payments or 52 weekly payments).

3.

Ignore any cents.

4.

Add the amount at step 3 to the normal gross earnings for a single pay period.

5.

Use the same PAYG withholding tax tables used at step 1 to work out the amount to withhold for the amount at step 4.

6.

Subtract the amount at step 1 from the amount at step 5.

7.

Multiply the amount obtained at step 6 by the number of normal pay periods in 12 months (12 monthly payments, 26 fortnightly payments or 52 weekly payments).

Do not withhold any amount for study and training support loans.

Normal gross earnings

Normal gross earnings are all payments, except those relating to termination payments, received in the last full pay period of employment. This includes taxable allowances, overtime and bonuses. Therefore, your employee's normal gross earnings should be taken to be the earnings relating to the last full pay period worked.

Where your employee's pay fluctuates significantly over a number of pay periods, we will accept an average of gross taxable earnings for the financial year to date over the number of pays received.

The following example uses the Weekly tax table at ato.gov.au, effective from 1 July 2024.

Withholding variations

If an employee has a withholding variation in effect when unused leave payments are made, the rate specified on the variation notice will only apply to the unused leave payments if the notice includes unused leave payments. Otherwise, the rates in this schedule apply. This includes using the regular tax table per pay period for the marginal rate calculation, and not the varied withholding rate.

When a TFN has not been provided

If your employee who is receiving the unused leave payments has not provided you with their TFN before the payment is made, you must withhold 47% from the payment.

If your employee is a foreign resident who has not provided you with their TFN, you must withhold 45% from the payment.

If your employee believes that for their circumstances the amount you withhold will be too much, they may apply for a variation to reduce the amount of withholding.

Tax file number (TFN) declaration

Any Tax file number declaration your employee provides while they were working for you will only be effective:

•

for the period that they were working for you, or

•

12 months after you make the last payment.

Schedule 8 - Statement of formulas for calculating study and training support loans components

This schedule applies to withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), 12-C (except sections 12-85 and 12-90) and 12-D of Schedule 1 to the TAA.

The coefficients in this schedule should be used together with Schedule 1 - Statement of formulas for calculating amounts to be withheld.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024 and apply to payments made from 1 July 2024 to 30 June 2025.

Using this schedule

Use this schedule if you develop your own payroll or accounting software package. Formulas and coefficients are used for calculating weekly withholding amounts for employees who have a:

•

Higher Education Loan Program (HELP) debt

•

VET Student Loan (VSL) debt

•

Financial Supplement (FS) debt

•

Student Start-up Loan (SSL) debt (includes ABSTUDY SSL debts), or

•

Australian Apprenticeship Support Loan (AASL) debt (- formerly Trade Support Loan debt).

Using a formula

The withholding amounts for employees who have a study and training support loans debt can be expressed in a mathematical form.

If you have developed your own payroll or accounting software package, use the formulas and component rates outlined below.

The formulas comprise linear equations of the form y = ax, where:

•

y is the weekly study and training support loans component

•

x is the weekly earnings - or weekly equivalent of earnings - rounded down to whole dollars plus 99 cents

•

a is the value of the component rate as shown in the following tables.

Study and training support loans component rates

Tax-free threshold claimed or foreign resident

No tax-free threshold claimed

Calculating fortnightly, monthly or quarterly withholding amounts

First calculate the weekly equivalent of fortnightly, monthly or quarterly earnings. If you pay:

•

fortnightly - divide the sum of the fortnightly earnings and the amount of any allowances subject to withholding by 2. Ignore any cents in the result and then add 99 cents.

•

monthly - obtain the sum of the monthly earnings and the amount of any allowances subject to withholding (if the result is an amount ending in 33 cents, add one cent). Multiply this amount by 3 and then divide by 13. Ignore any cents in the result and then add 99 cents.

•

quarterly - divide the sum of the quarterly earnings and the amount of any allowances subject to withholding by 13. Ignore any cents in the result and then add 99 cents.

Then calculate fortnightly, monthly or quarterly withholding amounts as follows:

•

fortnightly - determine the rounded weekly withholding amount applicable to the weekly equivalent of earnings before any adjustment for tax offsets. Multiply this amount by 2.

•

monthly - determine the rounded weekly withholding amount applicable to the weekly equivalent of earnings before any adjustment for tax offsets. Multiply this amount by 13, divide the product by 3 and round the result to the nearest dollar.

•

quarterly - determine the rounded weekly withholding amount applicable to the weekly equivalent of earnings before any adjustment for tax offsets. Multiply this amount by 13.

When to work out the study and training support loans component

You will need to calculate the study and training support loans component when your employee has given you a Tax file number declaration or Withholding declaration and has:

•

answered yes to the question on whether they have a:

-

Higher Education Loan Program (HELP) debt

-

VET Student Loan (VSL) debt

-

Financial Supplement (FS) debt

-

Student Start-up Loan (SSL) debt (including ABSTUDY SSL debts) or

-

Australian Apprenticeship Support Loan (AASL) debt (formerly Trade Support Loan debt)

•

not completed a Medicare levy variation declaration claiming a reduction or exemption in the Medicare levy for having a spouse or dependants and low family income

•

claimed the tax-free threshold or is a foreign resident with earnings of one of the following:

-

$1,046 or more if paid weekly

-

$2,092 or more if paid fortnightly

-

$4,532.67 or more if paid monthly

-

$13,598 or more if paid quarterly.

If your employee has not claimed the tax-free threshold, the study and training support loans component is calculated on earnings of:

•

$696 or more if paid weekly

•

$1,392 or more if paid fortnightly

•

$3,016.00 or more if paid monthly

•

$9,048 or more if paid quarterly.

You must withhold the study and training support loans component from all your employee's earnings, including taxable allowances, bonuses and commissions.

Do not withhold any amount for study and training support loans debts from lump sum termination payments.

Coefficients to work out the weekly amounts to withhold

Your employee's total withholding, including the study and training support loans component, can be calculated using the formula and coefficients stated below.

Using a formula

The formulas comprise linear equations of the form y = ax - b, where:

•

y is the weekly withholding amount expressed in dollars

•

x is the number of whole dollars in the weekly earnings plus 99 cents

•

a and b are the values of the coefficients for each set of formulas for each range of weekly earnings (or, in the case of fortnightly, monthly or quarterly earnings, the weekly equivalent of these amounts).

If two employees are taxed using a particular scale (for example, scale 2) but only one of them has a study and training support loans debt, you will need to set up two separate scales in your payroll system. One scale will need to incorporate the study and training support loans component and one will not - for example, name one 'scale 2' and the other 'scale 22'.

The study and training support loans component does not apply if the employee has not provided a tax file number (TFN).

For scales without the study and training support loans component, refer to Schedule 1 - Statement of formulas for calculating amounts to be withheld.

Where tax-free threshold not claimed in Tax file number declaration - scale 1

With study and training support loans debt

Note: Scale 1 contains a negative value for one of the 'b' coefficients. This is intentional.

Where employee has claimed the tax-free threshold in Tax file number declaration - scale 2

With study and training support loans debt

Foreign residents - scale 3

With study and training support loans debt

Where employee claimed FULL exemption from Medicare levy in Medicare levy variation declaration - scale 5

With study and training support loans debt

Where employee claimed HALF exemption from Medicare levy in Medicare levy variation declaration - scale 6

With study and training support loans debt

Rounding of withholding amounts

Withholding amounts calculated as a result of applying the formulas are rounded to the nearest dollar. Values ending in 50 cents are rounded to the next higher dollar. Do this rounding directly - that is, do not make a preliminary rounding to the nearest cent.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the sample data provided at ato.gov.au/taxtables. The results obtained when using the coefficients in this schedule may differ slightly from the sums of the amounts shown in the pay as you go (PAYG) tax tables. The differences result from the rounding of components. Withholding calculated using either method is accepted.

Schedule 9 - Tax table for seniors and pensioners

This schedule applies to withholding payments covered by Subdivisions 12-B (except sections 12-50 and 12-55), and 12-D of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make payments to:

•

seniors and pensioners who, at the end of the relevant financial year, are 67 years of age or older (for example, to be eligible for the year ending 30 June 2025, a payee must be born on or before 30 June 1958)

•

veterans receiving a service pension and/or war widows/widowers receiving an income support supplement from the Department of Veterans' Affairs who are at least 60 years of age.

This schedule applies to weekly payments including:

•

salary, wages, allowances and leave loading paid to employees

•

directors' fees

•

payments to labour-hire workers

•

compensation, sickness or accident payments that are calculated at a periodical rate and made because a person is unable to work (unless the payment is made under an insurance policy to the policy owner)

•

a non-super income stream

•

a super income stream.

This schedule can only apply if the payee has provided you with either:

•

a Withholding declaration indicating that they are an Australian resident for tax purposes at question 4 and answered yes to questions 5 and 8

•

a Withholding declaration - short version for seniors and pensioners indicating that they are an Australian resident for tax purposes at question 4 and answered yes to questions 5 and 6.

For super income stream payments, you must also use Schedule 13 - Tax table for superannuation income streams to calculate withholding.

Working out the withholding amount

To work out the withholding amount:

1.

Calculate your payee's total weekly earnings, add any allowances and irregular payments that will be included in this week's pay to the normal weekly earnings, ignoring any cents.

2.

Using the applicable tab in the Withholding lookup tool at ato.gov.au/taxtables, input the amount from step 1 as per instructions in the tool.

3.

Use the appropriate column to find the correct amount to withhold. If your payee is:

-

single, use column 2

-

a member of an illness-separated couple, use column 3

-

a member of a couple, use column 4.

4.

If your payee is entitled to a tax offset or a Medicare levy adjustment, subtract its weekly value from the withholding amount found in step 3.

Calculating fortnightly or monthly withholding amounts

First calculate the weekly equivalent of fortnightly or monthly earnings. If you pay:

•

fortnightly - divide the sum of the fortnightly earnings and the amount of any allowances subject to withholding by two. Ignore any cents in the result and then add 99 cents.

•

monthly - obtain the sum of the monthly earnings and the amount of any allowances subject to withholding (if the result is an amount ending in 33 cents, add one cent). Multiply this amount by three and then divide by 13. Ignore any cents in the result and then add 99 cents.

Then calculate fortnightly or monthly withholding amounts as follows:

•

fortnightly - work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by two.

•

monthly - work out the rounded weekly withholding amount applicable to the weekly equivalent of earnings, before any adjustment for tax offsets. Multiply this amount by 13, divide the product by three and round the result to the nearest dollar.

Using a formula

The withholding amounts shown in this schedule can be expressed in a mathematical form.

You should read this section with Schedule 1 - Statement of formulas for calculating amounts to be withheld.

If you have developed your own payroll or accounting software package, use the following formulas and the coefficients outlined below.

The formulas comprise linear equations of the form y = ax - b, where:

•

y is the withholding amount expressed in dollars

•

x is the weekly earnings rounded down to whole dollars plus 99 cents

•

a and b are the values of the coefficients for the formulas shown in the relevant 'Values of the coefficients a and b for each set of formulas' tables.

Note: Additional scales have been provided where the payee has claimed a FULL or HALF Medicare levy exemption.

Values of the coefficients a and b for each set of formulas

Scale 1 - Payee is single:

Scale 2 - Payee is a member of an illness-separated couple:

Scale 3 - Payee is a member of a couple:

Scale 4 - Payee is single and is claiming a FULL Medicare levy exemption:

Scale 5 - Payee is a member of an illness-separated couple and is claiming a FULL Medicare levy exemption:

Scale 6 - Payee is a member of a couple and is claiming a FULL Medicare levy exemption:

Scale 7 - Payee is single and is claiming a HALF Medicare levy exemption:

Scale 8 - Payee is a member of an illness-separated couple and is claiming a HALF Medicare levy exemption:

Scale 9 - Payee is a member of a couple and is claiming a HALF Medicare levy exemption:

Medicare levy parameters

Rounding of withholding amounts

Withholding amounts calculated as a result of applying the formulas are rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar.

If no TFN is provided, ignore cents when you calculate withholding amounts.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the withholding amounts obtained using the Withholding lookup tool at ato.gov.au/taxtables. You should only use such software if it produces the exact amounts.

Tax file number (TFN) declarations

The answers your payees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from a payee, it will override the previous one.

If a payee does not give you a valid Tax file number declaration within 14 days of starting a payer-payee relationship, you must complete a Tax file number declaration with all available details of the payee and send it to us.

When a TFN has not been provided

You must withhold 47% from any payment you make to a resident payee and 45% from a foreign resident payee (ignoring any cents), if all of the following apply:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If a payee states at question 1 of the Tax file number declaration they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the payee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident payee and 45% from a foreign resident payee (ignoring any cents) unless we tell you not to.

Do not allow for any tax offsets or Medicare levy adjustment. Do not withhold any amount for study and training support loans.

When your payee has a study and training support loan debt

If your payee has a HELP, VSL, FS, SSL or AASL debt, you may need to withhold additional amounts from their payments. Your payee will need to notify you of this on their Tax file number declaration or Withholding declaration.

Allowances

Generally, allowances are added to normal earnings and the amount to withhold is calculated on the total amount of earnings and allowances.

For more information on when to withhold and report on allowances, refer to Withholding for allowances.

Leave loading

If you pay leave loading as a lump sum, you need to use Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments to calculate withholding.

If you pay leave loading on a pro-rata basis, add the leave loading payment to the earnings for that period to calculate withholding.

Withholding declarations

A payee can use the Withholding declaration to advise you of a tax offset they choose to claim through reduced withholding. For more information on tax offsets, refer to the section in this schedule 'Claiming tax offsets'.

Payees can also use a Withholding declaration to advise you of changes to their situation that may vary the amount you need to withhold.

Changes that may affect the amount you need to withhold include:

•

becoming or ceasing to be an Australian resident for tax purposes

•

claiming or discontinuing a claim for the tax-free threshold

•

advising of a HELP, VSL, FS, SSL or AASL debt (or changes to them)

•

entitlement to a seniors and pensioners tax offset.

When your payee provides you with a Withholding declaration, it will take effect from the next payment you make. If you receive an updated declaration from a payee, it will replace the previous one.

A payee must have provided you with a valid Tax file number declaration before they can provide you with a Withholding declaration.

Claiming tax offsets

The seniors and pensioners tax offset (SAPTO) is incorporated into this schedule. If your payee chooses to claim their entitlement to other tax offsets through reduced withholding, they must give you a Withholding declaration.

To work out your payee's annual tax offset entitlement into a weekly value, use the Ready reckoner for tax offsets below. Deduct this amount from the amount shown in column 2, 3 or 4 of the applicable tab in the Withholding lookup tool at ato.gov.au/taxtables.

Ready reckoner for tax offsets

Tax offset entitlement - weekly value

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

Medicare levy exemptions

To claim the Medicare levy FULL or HALF exemption, a payee must lodge a Medicare levy variation declaration with their Tax file number declaration.

If using the formulas to calculate withholding, use the applicable scale where the payee has claimed a FULL or HALF Medicare levy exemption. If using the Withholding lookup tool, choose the tab applicable to FULL or HALF Medicare levy exemption.

Medicare levy adjustments

To claim the Medicare levy adjustment (available to some low income earners with dependants), a payee must lodge a Medicare levy variation declaration with their Tax file number declaration.

For instructions on how to work out the Medicare levy adjustment, refer to Medicare levy adjustment weekly tax table at ato.gov.au/taxtables.

Schedule 10 - Tax table for payments made under voluntary agreements

This schedule applies to withholding payments covered by section 12-55 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make payments to an individual under a voluntary agreement to withhold.

How to work out the withholding amount

To work out the withholding amount, you need to assess whether the payee has informed you of their Commissioner's instalment rate (CIR) and whether the amount includes GST.

For more information, refer to Payments under a voluntary agreement.

If the payee has informed you of their CIR

If the payee has informed you of their CIR, use the following to work out how much to withhold:

•

If the payee's CIR is greater than or equal to 20% - withhold the amount worked out by multiplying the amount of the payment by the CIR.

•

If the payee's CIR is less than 20% - withhold the amount worked out by multiplying the amount of the payment by 20%. However, if your voluntary agreement with the payee states that their CIR will apply, you must withhold the amount worked out by multiplying the amount of the payment by the CIR.

If the payee has informed you that they don't have a CIR

You must withhold 20% of the amount of the payment.

If the payment includes an amount for GST

If the payment includes an amount for GST, you exclude this GST amount when calculating the appropriate rate to withhold.

Rounding of withholding amounts

Withholding amounts calculated by applying this schedule should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar.

Schedule 11 - Tax table for employment termination payments

This schedule applies to withholding payments covered by paragraph 12-85(b) of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you pay an individual an amount that is either:

•

an employment termination payment (ETP)

•

a delayed termination payment - that is, a payment that would be an ETP but was paid more than 12 months after the relevant termination of employment.

If you employ individuals under a working holiday makers visa, you must use Schedule 15 - Tax table for working holiday makers for all payments made to them, including employment termination payments.

Employment termination payments

An ETP is a lump sum payment you make:

•

to an employee when their employment is terminated (referred to as a 'Life benefit' ETP)

•

to an employee's estate because their employment has been terminated due to death (referred to as a 'Death benefit' ETP).

ETPs include lump sum payments paid upon resignation, retirement or death. A payment from a super fund is not an ETP.

A payment must generally be made within 12 months of termination to qualify as an ETP. A payment made outside of 12 months is a delayed termination payment, unless we have given approval for the payment to be treated as an ETP.

Tax treatment of ETPs

ETPs can have two different components:

•

a tax-free component

•

a taxable component.

You only withhold tax from the taxable component.

Depending on the type of ETP, the concessional tax treatment may be limited to the smaller of:

•

the ETP cap

•

the whole-of-income cap.

The top rate of tax applies to amounts paid in excess of these caps.

The ETP cap amount for the 2024-25 income year is $245,000. This amount is indexed annually.

The whole-of-income cap amount for the 2024-25 income year is $180,000. This amount is not indexed. This cap is reduced by any other taxable income payments your employee receives in the income year - for example, salary or wages you have paid to your employee.

In some cases, you may need to include an ETP in the taxable payments when working out the whole-of-income cap.

The ETP payment summary has an ETP code that you use to describe the type of ETP and which cap has been applied to it.

ETP caps

The following table lists the types of ETPs that are subject to withholding and the applicable cap for each type of payment.

For payments in column 2, both caps are considered, and the smaller cap applies. Withholding will be required to be made at the top rate of tax on the amount over the smaller of the two caps.

Applicable caps for ETPs subject to withholding

Note 1: The tax-free base limit for the 2024-25 income year is $12,524 plus $6,264 for each completed year of service.

Steps to work out smallest cap

Follow these steps to work out the smaller of the ETP cap and whole-of-income cap:

1.

Add up all taxable payments you made to your employee (excluding the ETP).

2.

Subtract the step 1 result amount from $180,000.

3.

The result from step 2 is the calculated whole-of-income cap.

4.

Compare the calculated whole-of-income cap from step 3 and the ETP cap amount of $245,000 for 2024-25 (or the balance of ETP cap if a payment component has already applied to the ETP cap where there have been multiple payments for the same termination).

5.

If both caps are equal, use the whole-of-income cap. The smaller of the two caps at step 4 is the cap to apply to the ETP taxable component.

Multiple payments for same termination

For various reasons, ETPs may be made in more than one instalment. Payments made after the initial payment subject to the ETP cap, will attract a lower ETP cap. This is because the cap amount is reduced by the amount of all previous payments for the same termination.

Lump sum payments that are not ETPs may also be subject to PAYG withholding. Use the applicable tax table to work out the amount to be withheld from these payments.

Do not allow for any tax offsets or Medicare levy adjustments.

Do not withhold any amount for study and training support loans.

Death benefit ETPs

A death benefit termination payment is received by a person after another person's death, in consequence of termination of the other person's employment. The amount to withhold depends on a number of factors including whether the payment is made:

•

directly to a dependant of the deceased

•

directly to a non-dependant of the deceased

•

to the trustee of the deceased estate.

Use Table A in this schedule to work out how much to withhold.

Working out the withholding amount

An ETP can be made up of a tax-free component and taxable component. You must withhold an amount from the taxable component, including death benefit ETPs.

Do not withhold from the tax-free component of the ETP.

If your employee who is receiving an ETP has given you their tax file number (TFN) on a Tax file number declaration, use Table A in this schedule to work out how much to withhold.

A Tax file number declaration remains effective for 12 months after you make the last payment to them.

Withholding amounts calculated by applying Table A are rounded to the nearest dollar. Results ending in 50 cents are rounded upwards.

If the payment is to be made to a foreign resident, you will need to check if there is a tax treaty with their country of residence. The full list of our tax treaties is maintained by Treasury and can be found at 'Australian Tax Treaties' in your internet search engine. If the ETP is assessable only in the other country because of the treaty, then no withholding is required.

If a foreign resident's ETP is assessable in Australia, you are required to withhold from the payment. Adjust the rates set out in Table A to exclude the Medicare levy of 2%.

When a TFN has not been provided

You must withhold 47% from the taxable component of an ETP you make to a resident employee and 45% from a foreign resident employee (ignoring any cents) who has not given you their TFN.

Examples

Table A: Withholding rates for ETPs

Table A: Withholding rates for ETPs

Additional information

The ETP cap amount for the 2024-25 income year is $245,000. The amount is indexed annually.

The whole-of-income cap amount for the 2024-25 income year and future years is $180,000. This amount is not indexed.

A death benefit dependant for taxation purposes includes:

•

spouse of the deceased

•

child of the deceased under 18 years old

•

a person who had an interdependency relationship with the deceased

•

a person who was a dependant of the deceased just before the latter died.

A spouse of the deceased includes another person (of any sex) who:

•

was in a relationship with the deceased as registered under a prescribed state or territory law

•

lived with the deceased on a genuine domestic basis in a relationship as a couple, although not legally married.

A child of the deceased includes:

•

an adopted child, stepchild or ex-nuptial child

•

a child of the deceased's spouse

•

a child of the deceased within the meaning of the Family Law Act 1975 (for example, a child who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement).

An interdependency relationship includes:

•

a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other

•

a close personal relationship between two people who live together but do not satisfy one or more of the requirements mentioned in the previous dot point due to either or both of them suffering from a physical, intellectual or psychiatric disability.

For further information on interdependency relationships and before accepting that a person is financially dependent, refer to interdependency relationship.

If an ETP will be paid to the trustee of a deceased estate, no amount should be withheld.

Rounding of withholding amounts

Withholding amounts calculated by applying this schedule are rounded to the nearest dollar. Results of 50 cents or higher are rounded upwards. If a TFN is not provided, ignore cents when calculating withholding amounts.

Delayed termination payments

Generally, a payment must be made within 12 months of termination to qualify as an ETP. A payment made after 12 months is a delayed termination payment unless we have given approval for the payment to be treated as an ETP.

A delayed termination payment is not treated as an ETP. It must be reported in:

•

'Gross payments' in Single Touch Payroll (STP), or

•

PAYG payment summary - individual non-business for those not reporting through STP.

If your employee has given you their TFN, withhold an amount equal to 32% from the delayed termination payment. Withholding amounts are rounded to the nearest dollar once calculated. Results ending in 50 cents are rounded to the next higher dollar.

If your employee has not given you a TFN, you must withhold 47% from the delayed termination payment you make to a resident employee and 45% from a foreign resident employee. Ignore any cents in the result.

Preservation age

The withholding amount varies depending on whether the employee has reached their preservation age by the end of the income year in which the payment is made.

Preservation age is determined using your employee's date of birth. For example, if your employee was born on 1 October 1964, they reach their preservation age of 60 on 1 October 2024.

The table below outlines the transitional period where the preservation age increased progressively from 55 to 60. As the transitional period has been completed, for the 2024-25 and future income years the preservation age is 60 for all employees born after 30 June 1964. For those employees born before that date, they have already reached their preservation age.

Preservation age

ETP reporting

You must provide your employee with one or more PAYG payment summary - employment termination payment forms within 14 days of making an ETP, or report the ETP in the pay event if using Single Touch Payroll (STP).

An ETP code is used to describe the type of payment, and determines which cap, ETP cap or whole-of-income cap is applied. The tables below shows the type of ETPs and which code applies:

Life benefit ETP

Multiple payments for same termination

Death benefit ETP

Transitional termination payments were certain ETPs paid to an employee under an employment contract entered into before 10 May 2006. They were taxed concessionally if paid before 1 July 2012.

Schedule 12 - Tax table for superannuation lump sums

This schedule applies to withholding payments covered by paragraph 12-85(a) of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you make a super lump sum payment to an individual.

This schedule also provides information on the withholding requirements when an untaxed element of super interest is rolled over.

Super lump sums

A super lump sum payment includes a:

•

lump sum member benefit paid to an individual where a condition of release has been satisfied - for example, retirement, terminal medical condition, severe financial hardship, or compassionate grounds

•

lump sum death benefit paid to an individual following the death of the member or account holder

•

commutation of a super income stream (part or all of a super income stream is exchanged for a lump sum).

A super lump sum may be paid from a super fund, approved deposit fund (ADF) or a retirement savings account (RSA).

Components of a super lump sum

Before you can work out the withholding amount, you must calculate the components of the super lump sum.

A super lump sum may have two components:

•

a tax-free component

•

a taxable component which can include an:

-

element taxed in the fund (taxed element)

-

element untaxed in the fund (untaxed element).

You do not withhold from the tax-free component.

Working out the withholding amount

You must calculate the amount to withhold by applying the rates set out in Table A in this schedule if your payee:

•

is an Australian resident

•

receives a taxable component of a super lump sum

•

has provided you with their TFN.

These rates include the Medicare levy of 2%.

If the payment is to be made to a foreign resident, you will need to check if there is a tax treaty with their country of residence. The full list of our tax treaties is maintained by Treasury and can be found in the Australian Tax Treaties table. If, because of the treaty, the super lump sum is assessable only in the other country, then no withholding is required.

If a foreign resident's super lump sum is assessable in Australia, you are required to withhold from the payment. Adjust the rates set out in Table A to exclude the Medicare levy of 2%.

Different withholding rates apply for temporary residents who request a departing Australia superannuation payment.

Payments not subject to PAYG withholding

The following super lump sums are not subject to PAYG withholding:

•

a payment made to a person who is suffering from a terminal medical condition

•

a payment made to a dependant after the death of the member or account holder

•

an amount paid to the trustee of a deceased estate after the death of the member.

When a TFN has not been provided

Different withholding rates apply where the payee of the super lump sum has not provided you with their TFN before the payment is made.

Paid to an Australian resident

•

Under 60 years of age:

-

Taxable component (taxed element and untaxed element) withhold 47% (ignoring cents)

•

60 years of age or over:

-

Taxable component

o

taxed element - no amount is required to be withheld

o

untaxed element - withhold 47% (ignoring any cents).

Paid to a foreign resident

Check if there is a tax treaty with the payee's country of residence. If the super lump sum is assessable in the other country, no withholding is required.

If the super lump sum is assessable in Australia, use the following withholding rates:

•

Under 60 years of age:

-

Taxable component (taxed element and untaxed element) withhold 45% (ignoring cents)

•

60 years of age or over:

-

Taxable component

o

taxed element - no amount is required to be withheld

o

untaxed element - withhold 45% (ignoring any cents).

Do not allow for any tax offsets or Medicare levy adjustments. Do not withhold any amount for study and training support loans.

Rollovers

If the person entitled to receive the super lump sum asks you to roll over their benefit, you are generally not required to withhold from any of the rolled-over amount.

However, if the rollover benefit consists of a taxable component - untaxed element that exceeds the untaxed plan cap you are required to withhold at the following rates:

•

amount of the untaxed element up to the untaxed plan cap - no amount required to be withheld

•

amount of the untaxed element above the untaxed plan cap - withhold 47%.

A super lump sum death benefit cannot be rolled over - whether paid to dependants or non-dependants.

Table A: Withholding rates for super lump sums

Table A: Withholding rates for super lump sums

Additional information

Untaxed plan cap: For the 2024-25 income year, the untaxed plan cap is $1,780,000 and is indexed annually.

Lump sum less than $200: There is no withholding required from the whole amount if it is paid by a regulated super fund, complying ADF or RSA provider as a super lump sum and it is the payee's entire benefit.

A terminal medical condition exists if:

•

two registered medical practitioners have certified, jointly or separately, that the member suffers from an illness, or has incurred an injury, that is likely to result in the member's death within 24 months of the date of certification

•

at least one of the registered medical practitioners is a specialist practicing in an area related to the member's illness or injury

•

the certification period has not ended for each of the certificates.

The certification period is 24 months from the date of certification.

A death benefit dependant for taxation purposes includes:

•

spouse of the deceased

•

child of the deceased under 18 years old

•

a person who had an interdependency relationship with the deceased

•

a person who was a dependant of the deceased just before the latter died

•

any individual who is paid a lump sum death benefit if the deceased died in the line of duty as a member of the defence force, a member of the Australian Federal Police or the police force of a state or territory, or a protective service officer (as defined in the Australian Federal Police Act 1979).

A spouse of the deceased includes another person who:

•

was in a relationship with the deceased that was registered under a law of a prescribed state or territory

•

lived with the deceased on a genuine domestic basis in a relationship as a couple, although not legally married.

A child of the deceased includes:

•

an adopted child, stepchild or ex-nuptial child

•

a child of the deceased's spouse

•

a child of the deceased within the meaning in the Family Law Act 1975 (for example, somebody who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement).

An interdependency relationship includes:

•

a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other

•

a close personal relationship between two people who live together but do not satisfy one or more of the requirements mentioned in the previous dot point due to either or both of them suffering from a physical, intellectual or psychiatric disability.

For further information on interdependency relationships and before accepting that a person is financially dependent refer to interdependency relationship.

Rounding of withholding amounts

Withholding amounts calculated by applying this schedule are rounded to the nearest dollar. Results of 50 cents or higher are rounded upwards. If a TFN is not provided, ignore cents when calculating withholding amounts.

Preservation age

The withholding amount varies depending on whether the payee has reached their preservation age when the payment is made.

Preservation age is determined using your payee's date of birth. For example, if a member was born on 1 October 1964, they reach their preservation age of 60 on 1 October 2024.

The table below outlines the transitional period where the preservation age increased progressively from 55 to 60. As the transitional period has been completed, for the 2024-25 and future income years the preservation age is 60 for all payees born after 30 June 1964. For those payees born before that date, they have already reached their preservation age.

Preservation age

Payment summaries

You must provide a PAYG payment summary - superannuation lump sum to the recipient of the super lump sum within 14 days of making a lump sum payment.

Payment summaries can also be printed using software that conforms to ATO reporting specifications.

Schedule 13 - Tax table for superannuation income streams

This schedule applies to withholding payments covered by paragraph 12-80(a) of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

About this schedule

Using this schedule

Use this schedule if you make a payment of a super income stream, including:

•

account-based super income streams - including death benefit income streams

•

capped defined benefit income streams - including death benefit income streams

•

transition to retirement income streams

•

temporary or permanent disability super income streams.

Super income streams

A super income stream is a series of regular payments from a superannuation provider when the payee has satisfied a condition of release. These regular payments can be paid weekly, fortnightly, monthly, quarterly or annually.

A super income stream may be:

•

an account-based super income stream

•

a capped defined benefit income stream which includes a:

-

lifetime pension, regardless of when it started

-

lifetime annuity that existed prior to 1 July 2017

-

life expectancy pension or annuity that existed prior to 1 July 2017

-

market-linked pension or annuity that existed prior to 1 July 2017

-

reversionary death benefit income stream.

Note: A commutation of an income stream is not a super income stream payment. It is a super lump sum. Refer to Schedule 12 - Tax table for superannuation lump sums.

Defined benefit income cap

The general defined benefit income cap for the 2024-25 financial year is $118,750. The defined benefit income cap may be reduced depending on the payee's circumstances.

Components of a super income stream

Before you can work out the withholding amount, you must calculate the components of the super income stream.

A super income stream may have two components:

•

taxable component, which can include either or both of an:

-

element taxed in the fund (taxed element)

-

element untaxed in the fund (untaxed element)

•

tax-free component.

Tax file number (TFN) declarations

Receiving and applying TFN declarations

The answers your payees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from a payee, it will override the previous one.

If a payee does not give you a valid Tax file number declaration within 14 days of starting a payer/payee relationship, you must complete a Tax file number declaration with all available details of the payee and send it to us.

When a TFN has not been provided

You must withhold 47% for residents and 45% for foreign residents (ignoring any cents), if a super income stream payment is made to your payee and they:

•

have not quoted their TFN

•

have not claimed an exemption from quoting their TFN

•

have not advised you they have applied for a TFN, or have made an enquiry with us.

If a payee states at question 1 of the Tax file number declaration that they have lodged a Tax file number application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the payee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident payee and 45% from a foreign resident payee from the relevant element(s) of the taxable component of the super income stream payment (ignoring any cents) unless we tell you not to.

Do not allow for any tax offsets, or Medicare levy adjustments. Do not withhold any amount for study and training support loans.

When not to apply the no-TFN withholding rate

Do not apply the no-TFN withholding rate to:

•

the tax-free component, or taxed element of a capped defined benefit income stream, where the payee is 60 years of age or over and the total of these amounts is below their defined benefit income cap

•

the taxed element of an account-based super income stream where the payee is 60 years or over.

In these circumstances no withholding is required.

Working out the withholding amount

Factors to consider

Factors to consider when working out the withholding amount include:

•

whether the payee is an Australian resident or foreign resident for tax purposes

•

the age of the payee

•

the frequency of the super income stream payments - for example, weekly, fortnightly or monthly

•

whether the payee is claiming the tax-free threshold

•

whether the payee is claiming the seniors and pensioners tax offset

•

whether the payee is receiving a disability super income stream

•

whether the super income stream includes an untaxed element (generally payments from state and Commonwealth public sector super schemes)

•

the type of super income stream

•

whether the total of the taxed elements and tax-free component is greater or less than the defined benefit income cap (the cap)

•

whether the defined benefit income cap should be reduced

•

whether the income stream is a super death benefit income stream.

Payments to Australian residents

This schedule is divided into five parts. The amount required to be withheld from a super income stream depends on the type of super income stream you pay:

•

account-based super income stream - use part A of this schedule

•

capped defined benefit income stream and:

-

payee is under 60 years of age at any time during the financial year, including:

o

disability super income streams

o

death benefit (including reversionary) income streams where the deceased was aged less than 60 - use part A (note: where the payee turns 60 during the year you will need to complete part E for post 60 income stream payments)

-

payee turns 60 years of age during the financial year or starts their super income stream part way through the year at age 60 or older - use part E for post 60 income stream payments

-

payee is 60 years of age or over for the full financial year:

o

a taxable component - taxed element and or a tax-free component - use part B

o

a taxable component - untaxed element only - use part C

o

a mixture of the above components - use part D

-

payee is under 60 years of age, and is in receipt of a reversionary death benefit income stream and the deceased was 60 years of age or older at the time of death - use part E.

Payments to foreign residents

If the super income stream is to be made to a foreign resident, you will need to check if there is a tax treaty with their country of residence. If the super income stream is assessable in the other country because of the treaty, no withholding is required.

If a foreign resident's super income stream is assessable in Australia, you are required to withhold from the payment.

Rounding of withholding amounts

Ignore any cents in an income stream before using any of the steps in this schedule to calculate withholding. Withholding amounts calculated using the steps are rounded to the nearest dollar. Results ending in exactly 50 cents are rounded to the next highest dollar. Do this rounding directly - do not make a preliminary rounding to the nearest cent. Where no TFN has been provided, cents are ignored when withholding amounts are calculated.

Part A

Use this part where the payee is:

•

below 60 years of age and is receiving a super income stream including a death benefit income stream

•

60 years of age or over and is receiving a super income stream that is not a capped defined benefit income stream with an untaxed element.

Note: If the payee turns 60 during the financial year and is in receipt of a capped defined benefit income stream, then you will also need to complete part E for post-60 income stream payments.

Taxable component contains taxed and untaxed elements

Withholding steps

Step 1: Use the following table to work out which elements of the taxable component withholding applies to.

How to apply withholding when taxable component contains untaxed element

Note: Do not withhold where the payee is receiving an account-based super income stream with a taxed element and tax-free component and is aged 60 years or older.

Step 2: Use the appropriate PAYG withholding tax table at ato.gov.au/taxtables to calculate the withholding amount relevant to the amount worked out in step 1. The tax table you use depends on the period the super income stream covers - that is, weekly, fortnightly or monthly.

Note: Some payees aged 60 years or over may be eligible to claim the seniors and pensioners tax offset (SAPTO). If the payee gives you a Withholding declaration indicating they want to claim a SAPTO entitlement through PAYG withholding, you should use Schedule 9 - Tax table for seniors and pensioners to work out the amount to withhold from the amount calculated in step 1.

Step 3: Some payees may be eligible for a tax offset. Use the following table to work out the tax offset amount for the payee.

Super income stream - taxable component

Super death benefits paid to a dependant

Disability super income stream - taxable component

Step 4: For some payees, the application of the offset from step 3 leads to under withholding for their Medicare levy. An offset adjustment is required where the tax offset calculated in step 3 is greater than zero. Use the applicable formulas below to calculate the offset adjustment amount. You will need to calculate the weekly equivalent of the taxable component or untaxed element if making fortnightly, monthly or quarterly payments. If an offset adjustment is not required, set the offset adjustment to zero.

Adjustment amounts per taxable component amount

Medicare levy parameters are contained in Schedule 1 - Statement of formulas for calculating amounts to be withheld.

Step 5: Calculate the notional amount to withhold by first subtracting the tax offset per payment (step 3) from the withholding amount (step 2).

Notional amount to withhold = withholding amount - tax offset

Then compare the notional amount to withhold with the offset adjustment amount calculated at step 4.

If the notional amount to withhold is:

•

less than the amount calculated at step 4, withhold the amount calculated at step 4

•

more than the amount calculated at step 4, withhold the notional amount to be withheld.

Tax-free component

If the super income stream is being paid to a payee under 60 years of age, you do not need to consider their tax-free component when calculating their withholding.

Part B

Use this part if the payee is receiving a capped defined benefit income stream during the year and is:

•

60 years of age or over and

•

their super income stream is made up of:

-

tax-free component

-

taxable component - taxed element

-

tax-free component and the taxable component - taxed element.

Withholding steps

Step 1: Convert the super income stream components the payee received for the period to an annualised amount and use the following table to work out whether withholding applies, and if so, what amount it applies to.

Step 2: Calculate the weekly, fortnightly or monthly equivalent of the amount from step 1 in excess of the cap. For example, if you pay the payee weekly, divide the excess by 52. If you pay fortnightly, divide the excess by 26. If you pay monthly, divide the excess by 12 (ignore cents in the result).

Step 3: Divide the amount calculated at step 2 by two (ignore cents in the result).

Step 4: Use the appropriate PAYG withholding tax table at ato.gov.au/taxtables to calculate the withholding amount relevant to the amount worked out in step 3. The tax table you use depends on the period the income stream covers - that is, weekly, fortnightly or monthly.

These examples use the PAYG withholding tax tables that apply from 1 July 2024.

Part C

Use this part if the payee is receiving a capped defined benefit income stream and:

•

is 60 years of age or over, and

•

their income stream is only made up of a taxable component - untaxed element.

Withholding steps

Step 1: Use the appropriate PAYG withholding tax table at ato.gov.au/taxtables to calculate the withholding amount relevant to this pay period's taxable component - untaxed element. The tax table you use depends on the period the income stream covers - that is, weekly, fortnightly or monthly.

Note: Some payees may be eligible to claim the seniors and pensioners tax offset (SAPTO). If the payee gives you a Withholding declaration indicating they want to claim a SAPTO entitlement through PAYG withholding, you should use the Schedule 9 - Tax table for seniors and pensioners to work out the amount to withhold from the amount calculated in step 1.

Step 2: Determine the tax offset for the payment.

Convert the untaxed element the payee received this period to an annualised amount. Use the following table to work out the amount of tax offset that applies.

Step 3:

If the annualised amount from step 2 is less than the cap, then:

Tax offset = untaxed element for the payment × 10%

If the annualised amount from step 2 is greater than the cap, then the annual tax offset is capped at 10% of the cap. Therefore, the tax offset for the payment is reduced to the weekly, fortnightly or monthly equivalent of the capped tax offset amount.

Step 4: Work out the amount to withhold by subtracting the tax offset per payment (step 3) from the withholding amount (step 1).

Amount to withhold = withholding amount - tax offset

If the tax offset amount is greater than the withholding amount, the amount to withhold is nil.

Part D

Use this part where the payee is receiving a capped defined benefit income stream and:

•

is 60 years of age or over, and

•

their income stream is made up of one or more of:

-

tax-free component and/or taxable component - taxed element

-

taxable component - untaxed element.

Withholding steps

Work out the amount subject to withholding

Step 1: Convert all of the components of the whole income stream the payee received during this period to an annualised amount.

Then add together all the annualised components that make up the income stream. Use the table below to determine whether you go to step 2 or part C.

Step 2: Add the annualised tax-free component and annualised taxed element. Subtract the cap from this amount. If this is less than the cap, go to step 5.

Step 3: Calculate the weekly, fortnightly or monthly equivalent of the amount at step 2. For example, if you pay the payee weekly, divide the excess by 52. If you pay fortnightly, divide the excess by 26. If you pay monthly, divide the excess by 12 (ignore cents in the result).

Step 4: Divide the amount calculated at step 3 by two (ignore cents in the result). The result is the amount subject to withholding.

Step 5: Calculate the weekly, fortnightly or monthly equivalent of the untaxed element and add this to the amount calculated at step 4 (if applicable).

Step 6: Use the appropriate PAYG withholding tax table at ato.gov.au/taxtables to calculate the withholding amount relevant to the amount worked out in step 5. The tax table you use depends on the period the income stream covers - that is, weekly, fortnightly or monthly.

Calculate the tax offset applicable

Step 7: If the sum of the annualised tax-free component and the annualised taxed element is equal or greater than the cap, then the payee is not entitled to a tax offset.

If the sum of the annualised tax-free component and the annualised taxed element is less than the cap, the payee is entitled to a reduced tax offset. Subtract from the cap the sum of the tax-free component and the taxed element from step 2 and apply 10% to this amount. The result is the annual tax offset amount.

Calculate the weekly, fortnightly or monthly equivalent of this tax offset. For example, if you pay the payee weekly, divide the amount by 52. If you pay fortnightly, divide the amount by 26. If you pay monthly, divide the amount by 12 (ignore cents in the result).

Work out the amount to withhold

Step 8: Subtract the tax offset per payment (step 7) from the withholding amount (step 6).

Amount to withhold = withholding amount - tax offset

These examples use the PAYG withholding tax tables that apply from 1 July 2024.

Part E

Use this part if the payee:

•

was 60 years or older for the full financial year and they started their capped defined benefit income stream for the first time part-way during the year [complete step 1(a)], or

•

turned 60 during the financial year and are in receipt of a capped defined benefit income stream [complete step 1(b)], or

•

was aged 59 years or younger for the full financial year and has a capped defined benefit income stream that is a reversionary death benefit income stream where the deceased was aged 60 or over at the time of death [complete step 1(c)].

Note: If the payee is in receipt of multiple capped defined benefit income streams (maybe from multiple sources) or where the payee is in receipt of their own income stream at the same time as they are receiving a reversionary death benefit income stream, then the reduction of the cap may not be correct in all circumstances.

Steps to reduce the defined benefit income cap

These examples use the PAYG withholding tax tables that apply from 1 July 2024.

Super death benefits

Dependants

Dependants include all children of the deceased under 18 years old, any spouse of the deceased (including a former spouse and a current or former de facto spouse), and any person with whom the deceased had an interdependency relationship.

An interdependency relationship includes a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other.

A dependant can also be a person who was financially dependent on the deceased.

Non-dependants

A person who is not a dependant of the deceased is not able to receive a super income stream from the deceased. A super death benefit income stream that was being paid to a non-dependant prior to 1 July 2007 is taxed in the same manner as a super death benefit income stream paid to a dependant.

Reversionary income streams

A death benefit income stream can either be reversionary or non-reversionary. A reversionary death benefit income stream is a super income stream that reverts to the entitled beneficiary automatically upon the member's death, if the death benefit payment is not a reversionary income stream then it is treated as if it was the member's income stream.

Supporting information

Defined benefit income cap

The defined benefit income cap is relevant if the payee is either:

•

60 years of age or over

•

Under 60 years of age and a death benefits dependant, where the deceased died aged 60 or over.

The defined benefit income cap applies if the payee receives one or more superannuation income stream benefits that are 'defined benefit income' to which 'concessional tax treatment' applies. The defined benefit income cap does not have taxation consequences outside of these circumstances.

The defined benefit income cap is an annual cap that is reset, and may be reduced, each year. From 1 July 2017, the 'defined benefit income cap' limits the amount of tax-free income the payee can receive from a capped defined benefit income stream (pension or annuity).

For the 2024-25 financial year, the defined benefit income cap is $118,750 (the $1.9 million general transfer balance cap divided by 16).

Preservation age

The withholding amount varies depending on whether the payee has reached their preservation age when the payment is made.

Preservation age is determined using your payee's date of birth. For example, if a member was born on 1 October 1964, they reach their preservation age of 60 on 1 October 2024.

The table below outlines the transitional period where the preservation age increased progressively from 55 to 60. As the transitional period has been completed, for the 2024-25 and future financial years the preservation age is 60 for all payees born after 30 June 1964. For those payees born before that date, they have already reached their preservation age.

Preservation age by date of birth range

Cap conversion table

The full year cap on defined benefit income streams is $118,750 as of 1 July 2024, and is subject to indexation. The cap may also need to be reduced - see part E.

The table below converts the $118,750 cap into the weekly, fortnightly or monthly equivalent

Conversion table for income streams commencing during current financial year

The table below can be used to determine the period to use for calculating withholding for income streams that start during the financial year:

Payment summaries

You must issue a PAYG payment summary - superannuation income stream to the payee for the total of the payments made in the financial year. This must be provided by 14 July. This date may be earlier if the payee requests it.

For 'account-based' income streams, you are only required to provide a payment summary to the payee where there is a requirement to withhold. You do not need to provide a payment summary for the period after the payee turns 60.

For 'capped defined benefit' income streams, where a payee turns 60 during the year you must issue two separate payment summaries - one for the period prior to the payee turning 60 and one for the period from the payee's 60th birthday.

A payment summary is required to be issued to a payee in receipt of a super income stream even if no tax was withheld.

Payment summaries can also be printed using software that conforms to our reporting specifications.

Schedule 14 - Tax table for additional amounts to withhold as a result of an agreement to increase withholding

This schedule applies to withholding payments covered by Subdivision 12-B, 12-C and 12-D of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if a payee has asked you to withhold a higher amount from their payments than would normally be required.

A payee's request to have additional amounts withheld should be in writing but can be in any format that suits your business. For example, an email request could be used, or you may design a paper or computer-based form for this purpose.

Your agreement to the arrangement will be indicated by withholding in accordance with the payee's request. No additional record is required.

The total amount to withhold is the normal amount calculated on the payee's earnings (based on the applicable withholding schedule or regulation) plus the additional amount requested by the payee.

How to work out the withholding amount

To work out the amount to withhold, you must:

1.

Use the appropriate tax table at ato.gov.au/taxtables to look up the normal amount of withholding for the period using instructions in that tax table.

2.

Work out the additional amount the payee wants withheld in accordance with their written request.

3.

Add the amount from step 1 to the amount from step 2.

Schedule 15 - Tax table for working holiday makers

This schedule applies to withholding payments covered by section 12-35 of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

This schedule applies to payments to individuals - including backpackers - who are working in Australia and hold at the time of the payment either a:

a.

working holiday makers visa (subclass 417)

b.

work and holiday makers visa (subclass 462)

c.

bridging visa permitting the individual to work in Australia if:

i.

the bridging visa was granted under the Migration Act 1958 in relation to an application for a visa of a kind described in paragraph a. or b., and

ii.

the Minister administering that Act is still to make a decision in relation to the application, and

iii.

the most recent visa, other than a bridging visa, granted under that Act to the individual was a visa of a kind described in paragraph a. or b.

This schedule applies to all payments made to working holiday makers, including:

•

salary and wages

•

allowances

•

termination payments (taxable component only)

•

unused leave

•

return to work payments

•

back payments, commissions, bonuses and similar payments

•

payments to actors and entertainers.

If you employ individuals under the Seasonal Worker Programme and Pacific Labour Scheme, or Pacific Australia Labour Mobility scheme, the tax table for working holiday makers does not apply.

If you made an employment termination payment to a working holiday maker, withholding does not apply to the tax-free component.

Generally, allowances are added to normal earnings and the amount to withhold using this schedule is calculated on the total amount of earnings and allowances. The withholding treatment and reporting requirements for various allowance types outlined in Withholding for allowances also applies to working holiday makers.

Working out the withholding amount

To work out the amount you need to withhold, you must:

•

input the total payments you will make to your employee for the pay period into the Working holiday makers Withholding lookup tool at ato.gov.au/taxtables

•

use the appropriate column to find the correct amount to withhold:

-

column 2 if you are registered and total payments you have made to the employee for the income year prior to this payment are less than $45,001 and the employee has given you a tax file number (TFN)

-

column 3 if you are registered and total payments you have made to the employee for the income year prior to this payment are from $45,001 to $135,000 and the employee has given you a TFN

-

column 4 if you are registered and total payments you have made to the employee for the income year prior to this payment are from $135,001 to $190,000 and the employee has given you a TFN

-

column 5 if you are registered and total payments you have made to the employee for the income year prior to this payment are more than $190,000 and the employee has given you a TFN

-

column 6 if you are registered and the employee has not given you a TFN.

Registered employer

You need to register with us before you employ a working holiday maker. If you are registered, you will be able to withhold at a flat rate of 15% up to $45,000 in total payments made to each individual working holiday maker within an income year.

Where total payments exceed $45,000, see Table A in this schedule for the applicable withholding rate.

Unregistered employer

If you have not registered with us to withhold at working holiday maker tax rates, you are required to withhold at foreign resident rates. These are specified in the tax tables for weekly, fortnightly or monthly payments at ato.gov.au/taxtables.

Using a formula

If you have developed your own payroll or accounting software package, use the formulas and coefficients outlined below to calculate the withholding amount.

The formulas comprise linear equations of the form y = ax, where:

•

y is the amount to be withheld expressed in dollars

•

x is total payment made to the employee for the pay period, ignoring any cents

•

a is the value of the coefficient as shown in Table A.

Table A: Working holiday makers income tax rates

Table A: Working holiday makers income tax rates for 2024-25

If no TFN is provided you must withhold at 45% on total payments made. If using formulas, the value of 'a' is 0.45.

Note: Working holiday makers cannot claim Medicare levy adjustments or tax offsets to reduce withholding. If your working holiday maker has claimed a Medicare levy adjustment on a Medicare levy variation declaration or a tax offset on a Withholding declaration, don't make any adjustments to the amount you withhold.

Any working holiday maker who is an Australian resident for tax purposes will be able to claim Medicare levy adjustments and tax offsets that they are entitled to when they lodge their income tax return.

Rounding of withholding amounts

The withholding amounts calculated as a result of applying the above rates and formula are rounded to the nearest dollar. Values ending in 50 cents and higher are rounded to the next higher dollar. Do this rounding directly - that is, do not make a preliminary rounding to the nearest cent.

Where withholding is calculated on the top marginal rate of tax or when no TFN is provided, ignore cents in the withholding result.

Software

Payroll or accounting software written in accordance with the formulas in this schedule should be tested for accuracy against the Working holiday makers Withholding lookup tool at ato.gov.au/taxtables. The results obtained when using the coefficients in this schedule may differ slightly from the tool. The differences result from the rounding of components. Withholding calculated using either method is accepted.

TFN declarations

Your employee may indicate that they are a working holiday maker in their TFN declaration.

Even if they don't, you will need to withhold amounts using the rates shown in Table A (provided they have given you a valid TFN).

This applies to either:

a.

working holiday makers visa (subclass 417)

b.

work and holiday makers visa (subclass 462)

c.

bridging visa permitting the individual to work in Australia if:

i.

the bridging visa was granted under the Migration Act 1958 in relation to an application for a visa of a kind described in paragraph a. or b., and

ii.

the Minister administering that Act is still to make a decision in relation to the application, and

iii.

the most recent visa, other than a bridging visa, granted under that Act to the individual was a visa of a kind described in paragraph a. or b.

To confirm the visa status of a working holiday maker, go to the 'Department of Immigration and Border Protection's Visa Entitlement Verification Online' (VEVO) webpage. This is where you can check visa details and conditions.

Working holiday makers cannot claim tax offsets. If they have claimed a tax offset on the Tax file number declaration, do not adjust the amount you withhold.

Working holiday makers cannot have a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or Australian Apprenticeship Support Loan (AASL) debt.

Working holiday makers cannot receive Community Development Employment Projects (CDEP) payments or Lump sum B payments.

If a TFN has not been provided

You must withhold 45% from payments to a working holiday maker (ignoring cents), if:

•

they have not quoted their TFN

•

they have not claimed an exemption from quoting their TFN

•

they have not advised you that they have applied for a TFN or have made an enquiry with us.

If an employee states at Question 1 of the Tax file number declaration that they have lodged a Tax file number - application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

If the employee has not given you their TFN within 28 days, you must withhold 45% from any payment you make unless we tell you not to.

A working holiday maker who has not quoted a TFN must still be provided with an income statement (or payment summary) with a payment type code 'H'.