Pay as you go (PAYG)
withholding
For payments
made on or after
1 July 2003
Tax Tables
Bonuses and similar payments
This document is a withholding schedule made by the Commissioner of Taxation in accordance with sections
15-25 and 15-30 of Schedule 1 to the Taxation Administration Act 1953. It applies to certain withholding
payments covered by Subdivision 12-B (except sections 12-50 and 12-55), 12-C (except 12-85 and 12-90) and
12-D of Schedule 1.
Who should use this table?
If bonus or similar payment relates to multiple pay periods
Where the bonus or similar payment relates to a period in excess
of one pay period or is paid on an irregular basis, you should
work out the correct amount to withhold using the following
steps:
1. use the relevant (or normal) tax table to work out the amount
to withhold on the payee’s normal earnings for one pay
period.
2. divide the bonus or similar payment by the number of pay
periods to which it relates.
3. disregard any cents eg $1.75 becomes $1 (if the result is
nil, there is no amount to withhold on the bonus/similar
payment).
4. add the amount in step 3 to the normal earning for a single
period.
5. use the tax tables to determine the amount to withhold on the
combined payments (calculated at step 4).
6. subtract the amount determined in step 1 from the amount
determined in step 5.
7. multiply the result by the number of pay periods to which the
bonus relates.
Note: If payment is of a one-off nature and does not relate to
a particular pay period, for the purpose of this schedule, the
payment period is treated as a 52 week period.
You should use this table if you make a bonus or similar
payment to a payee. These include:
Bonus payment
A bonus payment is a payment typically made to a worker in
recognition of performance or services and may be calculated
as a percentage of the proceeds of the particular business
transaction. These payments are not necessarily in respect of a
particular period of work.
This schedule applies where a bonus payment relates to a period
of less than 12 months.
Lump sum in arrears
A lump sum in arrears of salary, wages and other payments
subject to withholding, is covered by this schedule where:
• a payment of salary or wages has accrued less than
12 months before the date you pay it, or
• other payments subject to PAYG withholding have accrued
less than 12 months before the date you pay it.
Other similar payments
Other similar payments covered by this schedule are amounts
of a one-off nature which do not relate to work performed in a
particular period. Examples include:
• an allowance payment to compensate a worker who is
required to work in a new location further from his or her
home, or
• a lump sum paid as a sign-on bonus to a worker entering a
workplace agreement.
This schedule applies where a similar payment relates to a period
of less than 12 months.
For all bonus, lump sum in arrears and other similar payments
relating to other periods refer to the PAYG withholding tax table
– Lump sum payments in arrears (NAT 3348).
Examples
The following examples use the tax table – Weekly rates
incorporating Medicare levy – without leave loading, effective
1 July 2000.
Example One
An employee whose weekly wage is $500 receives a $300.30
back payment of wage relating to a period of six weeks.
1. use the tax tables to work out the withholding on $500 = $89
2. divide the back payment of $300.30 by six pay periods =
$50.05
3. disregard any cents = $50
4. add this to the normal weekly wage of $500 = $550
5. use the tax tables to work out the withholding on $550 = $105
6. subtract the withholding amount in step 1 from the amount in
step 5 = $16
7. multiply this amount by the number of pay periods:
$16 x 6 = $96
How to work out withholding amounts
If bonus or similar payment relates to work performed in a
single pay period
Where a bonus or similar payment relates to work performed in
a single pay period, eg one week or one month, the amount is
added to any other payment for that period. An amount should
then be withheld in accordance with the PAYG withholding tax
tables.
The total withholding on the payment of normal weekly wages of
$500 plus the back payment of $300.30 is $185 (ie $89 + $96).
NAT 7905-6.2003
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Example Two
An employee whose weekly wage is $383.75 receives a bonus of
$45 relating to a period of 52 weeks.
1. use the tax tables to work out the withholding on $383 =
$54.00
2. divide $45 by 52 = $0.86
3. as the resulting amount is less than $1, the tax tables do
not require an amount to be withheld. There is no need to
calculate any further steps. The PAYG withholding on the
bonus is zero.
For more information
Further information, including all PAYG withholding tax
tables, can be accessed quickly and easily on our website at
www.ato.gov.au
Copies of weekly and fortnightly tax tables are available from
most newsagents.
Newsagents also hold copies of the Tax file number declaration
and the Withholding declaration.
The total withholding on the payment of normal weekly pay of
$383 plus the bonus of $45 is $54 (ie $54 + $0).
Example Three
A company relocating premises pays an employee who is
required to travel further to work a relocation payment of $520.
Their weekly wage is $750. As the payment is one-off and does
not relate to a particular pay period, the payment is spread over
52 weeks.
1. use the tax table to work out the withholding on $750 = $168
2. divide $520 by 52 = $10
3. add this to the normal weekly wage of $750 = $760
4. use the tax table to work out the withholding on $760 = $171
5. subtract the amount in step 1 from the amount in step 4 = $3
6. multiply this amount by the number of pay periods $3 x 52 =
$156
The total withholding on the payment of normal weekly pay of
$750 plus the relocation payment of $520 is $324 (ie $168 +
$156).
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