Using this schedule
This schedule applies to payments made from 1 July 2024.
This withholding schedule is made by the Commissioner of Taxation in accordance with sections 15-25 and 15-30 of Schedule 1 to the Taxation Administration Act 1953 (TAA). It applies to certain withholding payments paid as a lump sum that are 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.
Use this schedule if you make a payment of salary or wages which is a:
- back payment (including lump sum payments in arrears)
- commission
- 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. This includes 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.
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.