Examples of calculating the withholding amounts

Example: Medicare levy exemption

Jabe's weekly earnings are $1,333.45. They have completed a Tax file number declaration claiming the tax-free threshold. They have also provided a Medicare levy variation declaration with 5 children shown at question 12.

Therefore, scale 2 is applied.

X = 1,333.99

Weekly withholding amount (y)

= (a × x) − b

= (0.3200 × 1,333.99) − 176.5769

= 250.2999 or $250.00 (rounded to nearest dollar)

Levy adjustment: weekly earnings are greater than WFT ($1,230.40) and less than the SOP ($1,538) appropriate to an employee with 5 children. Formula (3) applies.

= (1,230.40 × 0.0200) – ([1,333.99 − 1,230.40] × 0.0800)

= 24.6080 − 8.2872

= 16.3208 or $16.00 (rounded to nearest dollar)

Net weekly withholding amount = $250.00 − $16.00 = $234.00

End of example

Example: Multiple claims

Prue's fortnightly earnings are $1,299.30. She resides in zone B, and has provided a Tax file number declaration that claims the tax-free threshold and a Withholding declaration that claims zone and tax offsets at the tax offsets questions that totals $1,645. She has also lodged a Medicare levy variation declaration claiming a full exemption from the Medicare levy.

Therefore, scale 5 is applied.

Convert to weekly equivalent = (1,299.30 ÷ 2)

= 649.65 or $649 (ignore cents)

x = 649.99

Weekly withholding amount (y)

= (a × x) − b

= (0.1600 × 649.99) − 57.8462

= 46.1522 or $46.00 (rounded to nearest dollar)

Fortnightly withholding amount

$46.00 × 2 = $92.00

Tax offsets claimed at the tax offsets questions on the Withholding declaration

= 3.8% of $1,645

= 62.5100 or $63.00 (rounded to nearest dollar)

Net fortnightly withholding amount

$92.00 − $63.00 = $29.00

End of example

Example 3:

Tan's monthly earnings are $5,400.33. He has provided a Tax file number declaration claiming the tax-free threshold and claimed a total tax offset of $1,365 at the tax offsets question on the Withholding declaration. he has one child but isn't eligible for a Medicare levy adjustment. The weekly equivalent of his earnings exceeds the Medicare levy SOP of $1,150 appropriate to an employee with one child.

Therefore, scale 2 is applied.

Convert to weekly equivalent = ($5,400.33 + 0.01) × 3 ÷ 13

= 1,246.2323 or $1,246 (ignore cents)

x = 1,246.99

Weekly withholding amount (y)

= (a × x) − b

= (0.3227 × 1,246.99) − 180.0385

= 222.3652 or $222.00 (rounded to nearest dollar)

Monthly withholding amount = $222.00 × 13 ÷ 3 = $962.00 (rounded to nearest dollar)

Tax offset claimed = 8.3% of $1,365 = 113.2950 or $113.00 (rounded to nearest dollar)

Net monthly withholding amount = $962.00 − $113.00 = $849.00