Taxation Administration Act 1953 - PAYG withholding - Tax table for bonuses and similar payments (19/10/2004)

Administered by Department of the Treasury

Legislation au F2007B01116 Not in force Legislative Instrument

Legislation content

Pay as you go (PAYG) withholding

Tax table for bonuses and similar payments

 

For payments made on

or after 1 NOV 2004

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), and 12-D of Schedule 1.

 

Who should use this table?

Use this table if you make a bonus or similar payment to a payee.

Bonus payment

This refers to payments usually made to an employee in recognition of performance or services and may be calculated as a percentage of the proceeds of the particular business transaction. These payments may not be related to a particular period of work.

Other similar payments

This refers to payments that are amounts of a one-off nature which do not relate to work performed in a particular period. Examples of these type of payments include:

 a once only allowance payment made to an employee as compensation for a changed work location that is further away from their home, or

 an amount paid as a sign-on bonus to a worker entering a workplace agreement.

Any payments that are considered back payments of salary or wages are not covered by this table. Payers making back payments should refer to PAYG withholding tax tables – back payments including lump sum payments in arrears (NAT 3348-9.2004) to work out the amount to withhold.

Date of effect

The rules in this tax table replace the rules outlined in PAYG withholding tax tables – bonuses and similar payments (NAT 7905-6.2003).

If you cannot apply the rules contained in this tax table immediately, you may continue to use the old tax table until 30 June 2005.


How to work out the amount to withhold

If the bonus or similar payment relates to work performed in a single pay period

Where the bonus or similar payment relates to work performed in a single pay period (for example one week or one month) the amount is added to all other earnings for the current period. An amount should then be withheld in accordance with the normal PAYG withholding tax tables.

If the 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 steps below.

1 Use the relevant tax table to work out the amount to withhold from 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. For example $1.75 becomes $1. If the result is nil, there is no amount to withhold on the bonus or similar payment.

4 Add the amount in step 3 to the normal earnings amount for a single period.

5 Use the same tax table used in step 1 to determine the amount to withhold on the combined payment amount calculated at step 4.

6 Subtract the amount worked out in step 1 from the amount worked out in step 5.

7 Multiply the result by the number of pay periods to which the bonus relates.

If the payment is a one-off payment and does not relate to a particular pay period or relates to a number of pay periods in excess of 12 months, for the purpose of this table, the payment is treated as being paid over a 12 month period.


Examples

The following examples use Weekly tax table – incorporating Medicare levy with and without leave loading (NAT 1005) effective from 1 July 2004. The calculations are made using column 3, with tax-free threshold and no leave loading.

 

Example one

 

 

 

An employee whose weekly wage for the current period is $383.75 receives an end of year bonus of $45.

As the bonus relates to the full year of work, it equates to 52 weekly pay periods.

 

 

 

 

 

 

Step

Method

Result

 

 

1

Use the tax table to work out the withholding on $383.

$52

 

 

2

Divide the bonus by the number of pay periods to which it relates ie $45  52.

$0.86

 

 

3

As the final amount is less than $1, according to the tax tables you do not need to withhold an amount. There is no need to calculate any further steps.

$0

 

 

The total withholding on the payment of normal weekly pay of $383 plus the bonus of $45 is $52 (ie $52 + $0).

 

 


 

Example two

 

 

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.

 

 

 

 

 

Step

Method

Result

 

 

1

Use the tax table to work out the withholding on $750.

$164

 

 

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.

$167

 

 

5

Subtract the amount in step 1 from the amount in step 4.

$3

 

 

6

Multiply this amount by the number of pay periods ie $3 x 52.

$156

 

 

The total withholding on the payment of normal weekly pay of $750 plus the relocation payment of $520 is $320 (ie $164 + $156).

 

PAYG withholding publications

All PAYG withholding tax tables and other PAYG publications can be accessed quickly and easily from 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.

Overview

The document titled "PAYG withholding tax table for bonuses and similar payments" is a legislative instrument made by the Commissioner of Taxation under sections 15-25 and 15-30 of Schedule 1 to the Taxation Administration Act 1953. Enacted in 2004, it was introduced to provide a clear and structured approach to the withholding of taxes on bonuses and similar payments, which often do not align neatly with regular pay periods. This instrument aims to ensure that taxpayers are correctly informed on the tax obligations for these types of payments, thereby maintaining compliance and preventing underpayment of taxes. It applies to certain withholding payments covered by Subdivisions 12-B and 12-D of Schedule 1, excluding specific sections 12-50 and 12-55. The policy objective is to streamline the calculation and withholding processes for employers, ensuring that the correct amount of tax is withheld from bonuses and similar one-off payments, thus supporting the efficient administration of the PAYG withholding system.

Scope and Application

The Pay As You Go (PAYG) withholding tax table for bonuses and similar payments applies to individuals or entities making bonus or similar payments to a payee, with bonuses generally referring to payments made to an employee in recognition of performance or services, and similar payments referring to one-off payments unrelated to a particular period of work. The legislation 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, and it applies to certain withholding payments covered by Subdivision 12-B (excluding sections 12-50 and 12-55), and 12-D of Schedule 1. The table applies across Australia and supersedes previous rules outlined in the PAYG withholding tax tables – bonuses and similar payments (NAT 7905-6.2003). The legislation provides a method for calculating the amount to withhold from bonus or similar payments, with different rules applying depending on whether the payment relates to work performed in a single pay period or multiple pay periods. The legislation does not apply to back payments of salary or wages, for which separate rules apply. The legislation is supported by subordinate instruments, including the PAYG withholding tax tables, which provide further detail on how to calculate the amount to withhold.

Key Provisions

The legislative instrument F2007B01116 provides a withholding schedule for bonuses and similar payments made on or after 1 November 2004, as authorised by 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 and 12-D of Schedule 1, with exceptions for sections 12-50 and 12-55. This schedule is intended for use by entities making bonus or similar payments to payees (section 1). The schedule outlines the method for calculating the amount to be withheld based on whether the bonus or similar payment relates to a single pay period or multiple pay periods (section 3). The Act imposes specific obligations on entities making bonus or similar payments. They must use the provided tax table to determine the correct withholding amount, applying different steps depending on whether the payment is related to a single pay period or multiple pay periods (section 4). For payments related to a single pay period, the bonus amount is added to the employee’s normal earnings for that period, and the withholding is calculated based on the combined amount using the normal PAYG withholding tax tables. For payments related to multiple pay periods, the process involves dividing the bonus by the number of pay periods, disregarding any cents, adding this to the employee’s normal earnings for a single period, and determining the withholding based on the combined amount. The resulting withholding amount is then multiplied by the number of pay periods. Payments not related to a specific pay period are treated as being paid over a 12-month period (section 4). Failure to comply with the requirements of this Act may result in civil or criminal consequences. While the specific penalties are not detailed in the provided text, entities are generally subject to penalties for non-compliance with PAYG withholding obligations under the Taxation Administration Act 1953. These penalties can include fines and interest on any unpaid tax. Additionally, persistent or egregious non-compliance might lead to more severe penalties or even criminal charges, depending on the nature and extent of the breach.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.