Pay As You Go (PAYG)
Withholding
Tax Tables
For payments
made on or after
1 July 2003
Lump Sum Payments In Arrears
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
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
paid as a lump sum.
Example
Mary-Anne is employed with Minercorp Pty Ltd and
receives a gross weekly salary of $850.00. She is entitled
to receive an additional allowance from her employer when
working in remote areas. In 1997, Mary-Anne worked
in a remote area for 6 months, but she was not paid the
additional allowance to which she was entitled. The total
allowance that was due to her for this period was $2,480.
Her employer’s oversight was finally discovered and her
employer agreed to pay her the $2,480 as a lump sum
payment in arrears on 1 November 2003. The amount
Mary-Anne’s employer must withhold from this payment is
calculated from the steps above and is as follows:
Who should use this table?
You should use this table if you make a lump sum payment to
another person of an amount:
1. that is assessable income of that person,
2. which accrued during a previous income year, and
3. that is:
• salary or wages which accrued more than 12 months
before the date you pay it, or
• salary or wages paid to the person after their
reinstatement to duty following a period of suspension
and the amount accrued during the period of suspension,
or
• payment by way of superannuation, pension or retiring
allowance or by way of an annuity, or
• by way of compensation or of sickness or accident pay in
respect of incapacity for work, being payments calculated
at a weekly or other periodical rate (excluding payments
under that person’s own policy), or
• a Commonwealth education or training payment, or
• pension, benefit or allowance covered by Division 52, 53
or 55 of the Income Tax Assessment Act 1997 and similar
payments paid under a law of a foreign country, or
• a payment to a company director, or
• a payment to a worker under a labour hire arrangement,
or
• a payment to a religious practitioner covered by section
12-47 of Schedule 1 to the Taxation Administration Act
1953.
If the lump sum amount has been accrued during the last
12 months before the date you pay it, please refer to PAYG
Withholding Tax Table – Bonuses and Other Payments
(NAT 7905).
1. From the Tax Table normally used to calculate the amount
of withholding for Mary-Anne, work out the withholding
on $850 = $201
2. Divide the lump sum payment in arrears of $2,480 by 52
pay periods (Mary-Anne is paid weekly). This gives $47.69
3. Disregard any cents = $47
4. Add this amount to the normal weekly wage of
$850 = $897
5. Use the Tax Tables used in Step 1 to work out the amount
of withholding on $897. This is $216
6. Subtract Step 1 from Step 5 = $15
7. Multiply $15 X 52 pay periods = $780
The total PAYG withholding on the payment of normal
weekly pay of $850 plus the lump sum payment in arrears
of $2,480 is: $201 (Step 1) + $780 (Step 7) = $981.
How to work out withholding amounts
Note: This example has used the PAYG Withholding Tax
Tables – Weekly Rates Incorporating Medicare Levy
- with/without leave loading effective 1 July 2000. You
must ensure that the most recent Tax Tables are used when
calculating withholding amounts.
If the individual has given his or her tax file number
The amount to be withheld is calculated as if the Lump Sum
payment was being paid over a 12 month period. You should
work out the correct amount to withhold using the following
steps:
1. Using the current Tax Tables, work out the amount to
withhold on the payee’s normal salary and wages for one
pay period.
2. Divide the Lump Sum Payment in arrears by the number of
normal pay periods in 12 months (ie. 12 monthly payments
or 26 fortnightly payments or 52 weekly payments).
3. Disregard any cents e.g. $143.75 becomes $143. (If the
result is nil, there is no amount to withhold from the Lump
Sum payment in arrears).
4. Add the amount in Step 3 to the normal payment for a
single pay period.
5. Use the relevant Tax Table to determine the amount
to withhold on the combined payment and Lump Sum
payment in arrears.
6. Subtract the amount determined in Step 1 from the amount
determined in Step 5.
7. Multiply the result by the number of normal pay periods in
12 months.
NAT 3348-6.2003
If the individual has not given you his or her tax file
number
You must withhold 48.5% of the lump sum payment in arrears
if the individual is a resident and has not provided you with
their tax file number.
If the individual is a foreign resident who has not provided you
with the tax file number, you must withhold 47% of the lump
sum payment in arrears.
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Payment Summary Requirements
For more information
Lump Sum Payment in Arrears equal to or over $400
Where a lump sum payment in arrears is equal to, or greater
than $400, you must include the gross payment, in addition to
any other similar lump sum payments, on the payee’s payment
summary at Lump Sum Payment label ‘E’.
Further information, including all PAYG withholding tax
tables, can be accessed quickly and easily on our website at
www.ato.gov.au
The withheld amount from the payment is included in the
‘Total Tax Withheld’ label.
Newsagents also hold copies of the Tax file number declaration
and the Withholding declaration.
Copies of weekly and fortnightly tax tables are available from
most newsagents.
For any year in which Lump Sum 'E' payments are made, you
must also provide the payee with a letter, detailing the financial
years over which the amount accrued, and the gross amount
which accrued in each of those years.
Lump Sum Payment in Arrears under $400
Where a lump sum payment in arrears is less than $400, you
should include the gross amount of payment, in the 'Gross
Payments' label on the payee's payment summary. You do
not have to complete Lump Sum Payment label 'E'. The
withheld amount from the payment is included in the ‘Total
Tax Withheld’ label.
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