Taxation Administration (Withholding Schedules) Instrument 2026

Administered by Department of the Treasury

Legislation au F2026L00716 In force Legislative Instrument

Legislation content

Explanatory Statement

Taxation Administration
(Withholding Schedules) Instrument 2026

 

 

General outline of instrument

  1.                   This instrument is made under section 15-25 in Schedule 1 to the Taxation Administration Act 1953 (TAA).
  2.                   The instrument makes withholding schedules that specify the amount, formulas and procedures to be used for working out the amount required to be withheld by an entity under the pay as you go (PAYG) system.
  3.                   The instrument contains fifteen withholding schedules. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule.
  4.                   The instrument repeals and replaces the previous legislative instrument Taxation Administration (Withholding Schedules) Instrument (No. 2) 2025 (F2025L01016), which was registered on 1 September 2025 (the 2025 instrument).
  5.                   Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
  6.                   The instrument is a legislative instrument for the purposes of the Legislation Act 2003.

 

Date of effect

  1.                   The instrument commences on 1 July 2026.

 

Effect of this instrument

  1.                   The withholding schedules in this instrument set out the amounts, formulas and procedures to be used to calculate the amount required to be withheld from certain payments. The withholding schedules facilitate the collection of income tax, Medicare levy, Higher Education Loan Program, Student Start-up Loans, Australian Apprenticeship Support Loans, VET Student Loans and Financial Supplement repayments.
  2.                   All withholding schedules have been updated by this instrument.
  3.               In addition to minor changes for formatting, style and clarity of expression, substantive changes include updates to account for:
  • amendments made to the Income Tax Rates Act 1986, which modified income tax rates for individuals for the 2026–27 income year.
  • amendments made to the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 which increased Medicare levy low-income thresholds.
  • annual indexing of the repayment income thresholds for study and training support loans and other rates and thresholds.

 

Incorporation of withholding lookup tools and forms

  1.               To assist entities to determine the correct amount to withhold, several withholding schedules include withholding lookup tools. The lookup tools are spreadsheets which identify a specific amount to withhold for a pay period, after an earnings amount is input into the spreadsheet for the pay period.
  2.               The lookup tools are freely available for entities to apply when using the withholding schedule. The withholding schedules with a lookup tool can be accessed on the ATO website (ato.gov.au) by searching for the withholding schedule’s quick code number in the table below:

Quick Code

Title

QC107120

Schedule 2 – Tax table for individuals employed in the horticultural or shearing industry

QC107121

Schedule 3 – Tax table for actors, variety artists and other entertainers

QC107127

Schedule 9 – Tax table for seniors and pensioners

QC107133

Schedule 15 – Tax table for working holiday makers

 

  1.               To assist entities to determine the correct amount to withhold, consideration must be also given to whether certain forms referred to in the instrument have been completed, and the information that has been provided in any such completed forms. The forms are available via the ATO website (ato.gov.au) by searching for the relevant quick code number in the table below.

Quick code

Title

QC107135

Fortnightly tax table

QC107141

Medicare levy adjustment weekly tax table

QC17088

Medicare levy variation declaration

QC26159

PAYG payment summary – employment termination payment

QC22557

PAYG payment summary – foreign employment

QC21978

PAYG payment summary – individual non-business

QC19550

PAYG payment summary – superannuation income stream

QC35966

PAYG payment summary – superannuation lump sum

QC27073

Payments to contractors under a voluntary agreement

QC107139

Study and training support loans fortnightly tax table

QC107140

Study and training support loans monthly tax table

QC107138

Study and training support loans weekly tax table

QC104947

Tax file number declaration

QC27134

TFN application or enquiry for individuals - instructions

QC16945

Tax tables

QC107137

Tax table for daily and casual workers

QC26218

Taxation of termination payments

QC16223

Voluntary agreement for PAYG withholding

QC107134

Weekly tax table

QC16347

Withholding declaration

QC18292

Withholding declaration – short version for seniors and pensioners

QC51680

Withholding for allowances

QC16601

Withholding from leave payment for continuing employees

 

  1.               These withholding lookup tools and forms are incorporated by reference in this instrument in accordance with paragraph 14(1)(b) of the Legislation Act 2003. That paragraph allows a legislative instrument to incorporate any other document in writing which exists either at the time the legislative instrument commences, or at a time before its commencement.
  2.               This instrument incorporates the withholding lookup tools and forms that existed immediately before this instrument was registered on the Federal Register of Legislation. These lookup tools and forms will remain unchanged for the life of this instrument. Changes to the withholding lookup tools and forms will only be made when it is necessary to give effect to a new legislative instrument that both contains new withholding schedules and repeals the current instrument.

 

Compliance cost assessment

  1.               Minor – there will be no or minimal impacts for both implementation and ongoing compliance costs. The legislative instrument is minor or machinery in nature (The Office of Impact Analysis reference OIA26-11824).

 

Background

  1.               The PAYG system, introduced by the A New Tax System (Pay As You Go) Act 1999, is a simple and convenient way for taxpayers to meet their annual income tax liabilities either through instalments or through withholding as their income is earned.
  2.               Under that system, payers are required to withhold (and remit to the ATO) amounts from certain payments they make to other entities during the year. This system aims to prevent large end-of-year tax bills. It also ensures that the Commonwealth has the revenue it needs during the year to provide services and benefits to the community.
  3.               Subsection 15-25(1) in Schedule 1 to the TAA empowers the Commissioner to make withholding schedules specifying the amounts, formulas and procedures to be used for working out the amount required to be withheld by an entity. The TAA requires the Commissioner to make each withholding schedule publicly available.
  4.               This instrument contains the withholding schedules, to help payers withhold the correct amount from certain payments they make.
  5.               Each withholding schedule is tailored to meet the circumstances of a particular class of payment or payee.
  6.               These schedules are relied on by a number of groups including employers, employees, other payers, payees, professional tax advisers, payroll software developers, payroll service providers, and the ATO.

 

Consultation

  1.               Subsection 17(1) of the Legislation Act 2003 requires that the Commissioner undertake an appropriate level of consultation that is reasonably practicable to undertake before making a legislative instrument.
  2.               No public consultation was undertaken before making this instrument. The making and publication of withholding schedules is a routine part of tax administration. Consultation is not undertaken for withholding schedules because changes to indexed thresholds do not generally become available until shortly before the instrument commences.


Statement of compatibility with human rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Taxation Administration (Withholding Schedules) Instrument 2026

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview

This legislative instrument makes publicly available the withholding schedules that entities must use under the pay as you go (PAYG) system. The schedules provide certainty to payers about what amounts they are required to withhold (and remit to the Australian Taxation Office) from certain payments they make to other entities. This assists those other entities to meet their annual income tax liability.

Without the instrument, payers would not know the correct amounts to withhold from relevant payments. Further, the instrument helps ensure that taxpayers do not receive large end-of-year tax bills, and the Commonwealth has the revenue it needs during the year to provide services and benefits to the community.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms because it is of a minor or machinery nature. The withholding schedules set out the amounts, formulas and procedures to be used to calculate the amount required to be withheld from certain payments and remitted to the Australian Taxation Office.

 

Conclusion

This legislative instrument is compatible with human rights because it does not raise any human rights issues.

Overview

The Taxation Administration (Withholding Schedules) Instrument 2026 was enacted under section 15-25 in Schedule 1 to the Taxation Administration Act 1953 (TAA). This instrument was introduced to provide clarity and specificity to the pay-as-you-go (PAYG) withholding system, ensuring that entities can correctly withhold and remit the required amounts to the Australian Taxation Office (ATO). The instrument specifies the amounts, formulas, and procedures for calculating the withholding from various payments, facilitating the collection of income tax and other repayments. The instrument repeals and replaces the previous Taxation Administration (Withholding Schedules) Instrument (No. 2) 2025 and incorporates updates to account for recent legislative changes and annual indexing of various thresholds. It also includes withholding lookup tools and forms to assist entities in determining the correct withholding amounts. The instrument is designed to minimise compliance costs and has undergone a minor impact assessment.

Scope and Application

The Taxation Administration (Withholding Schedules) Instrument 2026 applies to entities within the pay as you go (PAYG) system, which includes employers, payers, and various other parties such as payroll software developers and service providers. The instrument governs the calculation of withholding amounts for income tax, Medicare levy, and several student loan repayments. It provides specific withholding schedules tailored to different classes of payments and payees, ensuring that the correct amounts are withheld and remitted to the Australian Taxation Office (ATO). The instrument is made under the Taxation Administration Act 1953 and is effective from 1 July 2026. It replaces the previous instrument from 2025, incorporating updated rates and thresholds that reflect legislative changes and annual indexing. Additionally, the instrument incorporates withholding lookup tools and forms available on the ATO website to assist entities in determining the correct withholding amounts. The instrument is a legislative instrument for the purposes of the Legislation Act 2003 and includes no significant impacts on implementation and ongoing compliance costs.

Key Provisions

The Taxation Administration (Withholding Schedules) Instrument 2026, made under section 15-25 of the Taxation Administration Act 1953, provides the withholding schedules used for calculating the amounts to be withheld under the pay-as-you-go (PAYG) system. These schedules, detailed in fifteen separate sections, outline the specific amounts, formulas, and procedures for withholding income tax, Medicare levy, and various loan repayments from payments made to individuals and entities. The instrument repeals and replaces the previous Taxation Administration (Withholding Schedules) Instrument (No. 2) 2025, reflecting updates such as changes to income tax rates, Medicare levy low-income thresholds, and indexed thresholds for study and training support loans. The Act imposes obligations on entities required to withhold amounts under the PAYG system, mandating the use of the specified withholding schedules to accurately calculate the withholding amounts. Entities must also consider any relevant forms or lookup tools incorporated by reference, such as the fortnightly tax table or the Medicare levy variation declaration, which assist in determining the correct withholding amounts. These tools and forms are available on the Australian Taxation Office (ATO) website and are integral to ensuring compliance with the withholding requirements. Breaches of the withholding requirements can lead to civil and criminal consequences. Entities failing to withhold the correct amounts may be liable for penalties under the PAYG withholding provisions of the Taxation Administration Act 1953. The penalties can include fines up to a maximum of 25% of the unpaid tax or a higher amount if the failure to withhold is deemed to be intentional. In more severe cases, criminal charges may be brought against individuals responsible for the non-compliance, potentially leading to imprisonment. The instrument also emphasises the importance of timely and accurate withholding to prevent large end-of-year tax bills for taxpayers and to ensure the Commonwealth receives the necessary revenue to fund public services. By providing clear guidelines and tools for withholding calculations, the Act aims to facilitate compliance and support the efficient administration of the PAYG system.

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Area of Law
Taxation Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Compliance Obligations
Reporting & Disclosure Obligations
Enforcement Powers
Regulatory Standards
Repeal & Amendment

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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.