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.