Pay As You Go (PAYG) Withholding Tax Tables | Effective 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.
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).
How to work out withholding amounts
If the individual has given his or her tax f le 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 3348-3.2003
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: |
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.
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 not given you his or her tax f le 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 f le number.
If the individual is a foreign resident who has not provided you with the tax f le number, you must withhold 47% of the lump sum payment in arrears.
Payment Summary Requirements
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’.
The withheld amount from the payment is included in the ‘Total Tax Withheld’ label.
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.
For more information
If you have any questions or need more information about calculating the amount to be withheld, you can contact the Tax Office:
• By phone:
— 13 28 66 (8.00am–6.00pm Mon–Fri) for general PAYG enquiries or to order Tax Office forms or publications; or
— 13 10 20 (8.00am–6.00pm Mon–Fri) for superannuation and ETP enquiries
• Visit www.ato.gov.au
• Obtain A Fax from Tax on 13 28 60
If you have a hearing or speech impairment phone the TTY service on 13 36 77.
If you do not speak English and need help, call the Translating and Interpreter Service (TIS) on 13 14 50.