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Withholding amounts examples

Examples of how to calculate the withholding amounts.

Published 16 June 2024

Examples

Example 1 below uses both:

Example 1: withholding from a bonus payment using Method A

Jarrod, who has an accumulated HELP debt, is due to receive an annual bonus of $900. Jarrod earns $1,400 per week. Using Method A, calculate the withholding amount for the current pay period as follows:

PAYG withholding component – for Example 1

Step

Instruction

Result

1

Work out Jarrod's gross earnings for the current pay period.

$1,400

2

Use the relevant tax table to find the amount to be withheld from Jarrod's gross earnings in step 1.

$272

3

Divide the additional payment by the number of pay periods in the financial year.
= $900 ÷ 52

$17

4

Add the amount at step 3 to the gross earnings at step 1.
$1,400 + $17

$1,417

5

Use the relevant tax table to find the amount to be withheld from the amount at step 4.

$277

6

Subtract the amount at step 2 from the amount at step 5.
= $277 − $272

$5

7

Multiply the amount at step 6 by the number of pay periods in the financial year for the withholding on the additional payment.
= $5 × 52

$260

As Jarrod has an accumulated HELP debt, his employer also needs to calculate a withholding amount from the bonus payment for HELP. They use the same method that they used to calculate withholding for the bonus payment in the first part of this example.

HELP component – for Example 1

Step

Instruction

Result

1

Work out Jarrod's gross earnings for the current pay period.

$1,400

2

Use the relevant tax table to find the amount to be withheld for HELP from Jarrod's gross earnings in step 1.

$42

3

Divide the additional payment by the number of pay periods in the financial year.
= $900 ÷ 52

$17

4

Add the amount at step 3 to the gross earnings at step 1.
= $1,400 + $17

$1,417

5

Use the relevant tax table to find the amount to be withheld for HELP from the amount at step 4.

$43

6

Subtract the amount at step 2 from the amount at step 5.
= $43 − $42

$1

7

Multiply the amount at step 6 by the number of pay periods in the financial year for the HELP withholding on the additional payment.
= $1 × 52

$52
Withholding limit (including HELP component) – for Example 1

Step

Instructions

Result

8

Multiply the additional payment being made in the current pay period by 47%.
= $900 × 47%

$423

9

Use the lesser amount of step 7 (combined) and step 8 for the withholding on the additional payment. Ignore any cents.

Combine two step 7 results $260 + $52
= $312. This amount is used as it’s less than step 8.

$312

10

See below

–

Calculate the total PAYG withholding amount for the current pay period (step 10)

Add the amounts to be withheld:

  • PAYG withholding on gross earnings in the current pay period = $272
  • HELP withholding on gross earnings in the current pay period = $42
  • PAYG withholding on additional payment = $260
  • HELP withholding on additional payment = $52

The total PAYG withholding is $626 ($272 + $42 + $260 + $52).

End of example

Example 2 below uses:

Example 2: withholding from a missed payment using Method B(i)

Robyn, who has an accumulated HELP debt, is due to receive a back payment relating to the current financial year following a pay rise. Since the first pay period of the current financial year and up until pay period 8, Robyn has earned $1,100 per week. From pay period 9 (her current pay period), Robyn will earn $1,200 per week.

Robyn’s back payment, which covers the first eight pay periods of the current financial year, will be paid to her in pay period 9. Therefore, Robyn will receive a back payment of $800 along with her normal gross earnings of $1,200.

Using Method B(i), calculate the withholding amount for the current pay period 9 as follows:

PAYG withholding component – for Example 2

Step

Instruction

Result

1

Work out how much of Robyn’s additional payment applied to each earlier pay period in the current financial year. In this example it is $800 over eight pay periods.
= $800 ÷ 8

$100

2

For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get the total earnings for that period.
= $1,100 + $100

$1,200

3

Use the relevant tax table to find the amount to be withheld from Robyn’s total earnings for that period.

$208

4

Subtract the amount previously withheld for the period from the amount at step 3.
= $208 − $175

$33

5

Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 8 × $33.

$264

6

Use the relevant tax table to find the amount to be withheld from Robyn’s gross earnings for the current pay period.

$208

7

Add the withholding on the additional payment (step 5) to the withholding on Robyn’s gross earnings (step 6) to work out the total withholding for the current pay period.
= $208 + $264

$472

As Robyn has an accumulated HELP debt, her employer also needs to calculate a withholding amount from the back payment for HELP. They use the same method as they used to calculate withholding for the back payment in the first part of this example.

Study and training support loan (HELP) component – for Example 2

Step

Instruction

Result

1

Work out how much of Robyn’s additional payment applied to each earlier pay period in the current financial year. In this example it is $800 over eight pay periods.
= $800 ÷ 8

$100

2

For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total normal earnings for that period.
= $1,100 + $100

$1,200

3

Use the relevant tax table to find the amount to be withheld for HELP from Robyn’s total normal earnings for that period.

$12

4

Subtract the amount previously withheld for the period from the amount at step 3.
= $12 − $11

$1

5

Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the HELP withholding on the additional payments. As it is the same amount for each pay period in this example, it will be 8 × $1.

$8

6

Use the relevant tax table to find the amount to be withheld for HELP from Robyn’s gross earnings for the current pay period.

$12

7

Add the HELP withholding on the additional payment (step 5) to the withholding on Robyn’s gross earnings (step 6) to work out the withholding for HELP for the current period.
= $12 + $8

$20

Calculate the total PAYG withholding amount for the current pay period

Add the amounts to be withheld:

  • PAYG withholding on gross earnings in the current pay period = $208
  • HELP withholding on gross earnings in the current pay period = $12
  • PAYG withholding on additional payment = $264
  • HELP withholding on additional payment = $8

The total PAYG withholding is $492 ($208 + $12 + $264 + $8).

End of example

 Example 3 below uses Schedule 1 - Statement of formulas for calculating amounts to be withheld (NAT 1004) effective from 1 July 2024.

The calculations are made using scale 2, with tax-free threshold.

Example 3: withholding from a lump sum payment in arrears using Method B(ii)

Laura is employed by Minercorp Pty Ltd and receives a fortnightly salary of $1,800. She is entitled to an allowance from her employer when working in remote areas. In 2022, Laura worked in a remote area for six months, but she was not paid this allowance. The total allowance that she should have been paid for this period was $2,480. Her employer discovers their oversight and agrees to pay her the $2,480 as a lump sum payment in arrears on 10 November 2024. Her gross earnings for pay period 10 is $1,800.

Laura has received normal earnings (year to date) of $18,000 including the current pay. The amount Laura's payer must withhold from this payment is calculated using Method B(ii) as follows:

Method B(ii) instruction – for Example 3

Step

Instruction

Result

1

Calculate Laura's average total earnings over the current financial year to date (including current pay).
= $18,000 ÷ 10

$1,800

2

Use the relevant tax table to find the amount to be withheld from Laura's average total earnings in step 1.

$222

3

Add all additional payments made to Laura in the current financial year if Method B(ii) was used to calculate the withholding, to the additional payment in the current pay. Laura's additional payment of $2,480 is then divided by the number of pay periods in the financial year.
= $2,480 ÷ 26

$95

4

Add the amount at step 3 to the average total earnings at step 1.
= $1,800 + $95

$1,895

5

Use the relevant tax table to find the amount to be withheld from the amount at step 4.

$252

6

Subtract the amount at step 2 from the amount at step 5.
= $252 − $222

$30

7

Multiply the amount in step 6 by the number of pay periods used in step 3.
= $30 × 26

$780

8

Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding on the additional payment.
= $780 − $0

$780

9

Multiply the additional payment being made in the current pay period by 47%.
= $2,480 × 47%

$1,165

10

Use the lesser amount of step 8 and step 9 for the withholding on the additional payment. Ignore any cents.
= $780. This amount is used as it’s less than step 9.

$780

11

Use the relevant tax table to find the amount to be withheld from Laura's gross earnings (excluding additional payments) for the current pay period.

$222

12

Work out the total PAYG withholding for this pay period by adding the withholding on the additional payment (step 10) to the withholding on the gross earnings (step 11).
= $780 + $222

$1,002

End of example

Example 4 below uses both:

Example 4: withholding using Method B(i) and Method B(ii)

Bradley, who has an accumulated Financial Supplement debt, is employed by Macropayers Pty Ltd. On 1 September 2024, he received a salary increase of $5 an hour, taking his gross monthly salary from $4,600 to $5,400. His employer agreed that the increase would be backdated to 1 August 2023 and paid at the end of September 2024.

This means that the back payment of salary covers 13 pay periods. The total back payment of salary is $10,400. To work out the total amount to be withheld from the back payment to Bradley, his employer will need to calculate the amount accrued in both:

  • the current financial year (2 pay periods from 1 July to 31 August 2024) = $1,600
  • a prior financial year (11 pay periods from 1 August 2023 to 30 June 2024) = $8,800.

You don’t need to complete some steps if both Methods B(i) and (ii) are used in the calculations.

Method B(i) – PAYG withholding component – for Example 4

Step

Instruction

Result

1

Work out how much of Bradley's additional payment applied to each earlier pay period in the current financial year. In this example it is $1,600 over two pay periods.
= $1,600 ÷ 2

$800

2

For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total earnings for that period.
= $4,600 + $800

$5,400

3

Use the relevant tax table to find the amount to be withheld from Bradley's total earnings for that period.

$962

4

Subtract the amount previously withheld for the period from the amount at step 3.
= $962 − $706

$256

5

Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 2 × $256.

$512

6

This step is not required as withholding is also calculated using Method B(ii).

–

7

This step is not required as withholding is also calculated using Method B(ii).

–

As Bradley has an accumulated Financial Supplement (FS) debt, his employer will need to calculate a withholding amount from the back payment for FS. They use the same method as they used to calculate withholding for the back payment in the first part of this example.

Method B(i) – FS component – for Example 4

Step

Instruction

Result

1

Work out how much of Bradley's additional payment applied to each earlier pay period in the current financial year. In this example it is $1,600 over two pay periods.
= $1,600 ÷ 2

$800

2

For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total normal earnings for that period.
= $4,600 + $800

$5,400

3

Use the relevant tax table to find the amount to be withheld for FS from Bradley's total normal gross earnings for that period.

$108

4

Subtract the amount previously withheld for the period from the amount at step 3.
= $108 − $48

$60

5

Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the FS withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 2 × $60.

$120

6

This step is not required as withholding is also calculated using Method B(ii).

–

7

This step is not required as withholding is also calculated using Method B(ii).

–
Method B(ii) – PAYG withholding component – for Example 4

Step

Instruction

Result

1

Calculate Bradley's average total earnings, which in this example is
= (salary earnings to date + current financial year additional payments to date) ÷ number of pay periods
= [($4,600 + $4,600 + $5,400) + $1,600] ÷ 3
= $16,200 ÷ 3

$5,400

2

Use the relevant tax table to find the amount to be withheld from Bradley's average total earnings in step 1.

$962

3

Add all additional payments made to Bradley in current financial year where Method B(ii) was used to calculate the withholding, to the additional payment in current pay. Then divide by the number of pay periods in the financial year.
= $8,800 ÷ 12

$733

4

Add the amount at step 3 to the average total earnings at step 1.
= $5,400 + $733

$6,133

5

Use the relevant tax table to find the amount to be withheld from the amount at step 4.

$1,200

6

Subtract the amount at step 2 from the amount at step 5.
= $1,200 − $962

$238

7

Multiply the amount in step 6 by the number of pay periods used in step 3.
= $238 × 12

$2,856

8

Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding on the additional payment.
= $2,856 − $0

$2,856

9

This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.

–

10

This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.

–

11

This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.

–

12

This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.

–

As Bradley has an accumulated Financial Supplement debt his employer will need to calculate the withholding amount from the back payment for FS. They use the same method as they used to calculate withholding for the back payment in the first part of this example.

Method B(ii) – FS component – for Example 4

Step

Instruction

Result

1

Calculate Bradley's average total earnings, which in this example is:
= (salary earnings to date + current financial year additional payments to date) ÷ number of pay periods
= [($4,600 + $4,600 + $5,400) + $1,600] ÷ 3
= $16,200 ÷ 3

$5,400

2

Use the relevant tax table to find the amount to be withheld for FS on Bradley's average total earnings in step 1.

$108

3

Add all additional payments made to Bradley in current financial year where Method B(ii) was used to calculate the withholding, to the additional payment in current pay. Then divide by the number of pay periods in the financial year.
= $8,800 ÷ 12

$733

4

Add the amount at step 3 to the average total earnings at step 1.
= $5,400 + $733

$6,133

5

Use the relevant tax table to find the amount to be withheld for FS from the amount at step 4.

$182

6

Subtract the amount at step 2 from the amount at step 5.
= $182 − $108

$74

7

Multiply the amount in step 6 by the number of pay periods used in step 3.
= $74 × 12

$888

8

Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding for FS on the additional payment.
= $888 − $0

$888
Withholding limit (including FS component) – for Example 4

Step

Instruction

Result

9

Multiply the additional payment being made using Method B(ii) in the current pay period by 47%.
= $8,800 × 47%

$4,136

10

Use the lesser amount of step 8 (combined) and step 9 for the withholding on the additional payment. Ignore any cents.
Combine the two step 8 results.
= $2,856 + $888 = $3,744
This amount is used as it’s less than step 9.

$3,744

11

This step is not applicable as total withholding for the current pay period will need to include amounts calculated in Method B(i).

–

12

This step is not applicable as total withholding for the current pay period will need to include amounts calculated in Method B(i).

–

Calculate the total PAYG withholding amount for the current pay period

Add the amounts to be withheld:

Withholding on gross earnings current pay period

  • PAYG withholding on gross earnings in the current pay period = $962
  • FS withholding on gross earnings in the current pay period = $108

Method B(i) withholding

  • PAYG withholding on additional payment for current financial year = $512
  • FS withholding on additional payment for current financial year = $120

Method B(ii) withholding

  • PAYG withholding on additional payment for prior financial year = $2,856
  • FS withholding on additional payment for prior financial year = $888

Total PAYG withholding is $5,446
($962 + $108 + $512 + $120 + $2,856 + $888).

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