Schedule Sch 5 - Taxation Administration Withholding Schedules 2023 - – Tax table for back payments, commissions, bonuses and similar payments

Schedule 5 – Tax table for back payments, commissions, bonuses and similar payments

Withholding limit

There is a withholding limit of 47% on tax withheld from any additional payments calculated using an annualised method.

Applying this withholding limit may result in withholding not being sufficient to cover some employees' end of year tax liability. In these situations, an employee can ask their employer to increase their withholding for the remainder of the financial year.

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.

Use this schedule if you make a payment of salary or wages which is:

■ a back payment (including lump sum payments in arrears)

■ a commission

■ a bonus or similar payment.

If you employ individuals under a working holiday makers visa you must use the Tax table for working holiday makers for all payments made to them, including back payments, commissions and bonuses or similar payments.

Other payments you should use this schedule for

These payments include back payments of:

■ compensation or sickness or accident payments for an incapacity for work that are not tax exempt

■ Australian Government education or training payments – for example, Austudy or ABSTUDY

■ assessable pensions, benefits and allowances under the Social Security Act 1991 or the Veterans’ Entitlements Act 1986, or similar payments made under a law of a foreign country, state or province.

Back payments (including lump sums in arrears)

A back payment is a payment that was meant to have been made in a prior period. For example:

■ your employee’s wages were underpaid due to an error or oversight

■ an allowance you were due to pay in July was overlooked and you made the payment in December.

A back payment is distinct from a bonus, which is a payment made for recognition of performance including past performance. A bonus (or similar payment) can only be considered a back payment if you paid the bonus later than the time that it should have been paid.

If you normally process payments in a pay period later than when the work is performed – for example, overtime payments paid with a time lag of one pay period, they are not considered back payments. These payments are treated as part of the normal pay cycle when paid and withholding is calculated on total earnings for that period. An overtime payment is only considered a back payment if it was meant to have been made in a prior pay period.

<table cellspacing="0" cellpadding="0" style="border-collapse:collapse"><tbody><tr><td style="border-top:2.25pt solid #808080; border-right:0.75pt solid #ffffff; border-left:0.75pt solid #ffffff; border-bottom:0.75pt solid #ffffff; padding-right:9.62pt; padding-left:9.62pt; padding-bottom:9.9pt; vertical-align:top; background-color:#99ccff">Example 1: Withholding from a bonus payment using Method AMark, who has an accumulated HELP debt, is due to receive an annual bonus of $900. Mark earns $1,500 per week. Using Method A, calculate the withholding amount for the current pay period as follows:PAYG withholding component – for Example 1<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out Mark’s gross earnings for the current pay period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,500</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Mark’s gross earnings in step 1.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$335</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Divide the additional payment by the number of pay periods in the financial year. = $900 ÷ 52</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$17</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the amount at step 3 to the gross earnings at step 1. $1,500 + $17</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,517</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from the amount at step 4.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$341</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount at step 2 from the amount at step 5. = $341 − $335</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$6</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the amount at step 6 by the number of pay periods in the financial year for the withholding on the additional payment. = $6 × 52</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$312</td></tr></tbody></table>As Mark has an accumulated HELP debt, his employer also needs to calculate a withholding amount from the bonus payment for HELP. They use the same method that they used to calculate withholding for the bonus payment in the first part of this example.HELP component – for Example 1<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out Mark’s gross earnings for the current pay period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,500</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for HELP from Mark’s gross earnings in step 1.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$75</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Divide the additional payment by the number of pay periods in the financial year. = $900 ÷ 52</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$17</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the amount at step 3 to the gross earnings at step 1. = $1,500 + $17</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,517</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for HELP from the amount at step 4.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$76</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount at step 2 from the amount at step 5. = $76 − $75</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the amount at step 6 by the number of pay periods in the financial year for the HELP withholding on the additional payment. = $1 × 52</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$52</td></tr></tbody></table>Withholding limit (including HELP component) – for Example 1<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instructions</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">8</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the additional payment being made in the current pay period by 47%. = $900 × 47%</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$423</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">9</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the lesser amount of step 7 (combined) and step 8 for the withholding on the additional payment. Ignore any cents.Combine two step 7 results $312 + $52 = $364. This amount is used as it’s less than step 8.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$364</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">10</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">See below</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr></tbody></table>Calculate the total PAYG withholding amount for the current pay period (step 10).Add the amounts to be withheld:■ PAYG withholding on gross earnings in the current pay period = $335■ HELP withholding on gross earnings in the current pay period = $75■ PAYG withholding on additional payment = $312■ HELP withholding on additional payment = $52The total PAYG withholding is $774 ($335 + $75 + $312 + $52).</td></tr></tbody></table> ``` <table cellspacing="0" cellpadding="0" style="border-collapse:collapse"><tbody><tr><td style="border-top:2.25pt solid #808080; border-right:0.75pt solid #ffffff; border-left:0.75pt solid #ffffff; border-bottom:0.75pt solid #ffffff; padding-right:9.62pt; padding-left:9.62pt; padding-bottom:9.9pt; vertical-align:top; background-color:#99ccff">Example 2: Withholding from a missed payment using Method B(i)Robyn, who has an accumulated HELP debt, is due to receive a back payment relating to the current financial year following a pay rise. Since the first pay period of the current financial year and up until period 8, Robyn has earned $1,000 per week. From pay period 9 (her current pay period), Robyn will earn $1,100 per week.Robyn’s back payment, which covers the first eight pay periods of the current financial year, will be paid to her in pay period 9. Therefore, Robyn will receive a back payment of $800 along with her normal gross earnings of $1,100.Using Method B(i), calculate the withholding amount for the current pay period 9 as follows:PAYG withholding component – for Example 2<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out how much of Robyn’s additional payment applied to each earlier pay period in the current financial year. In this example it is $800 over eight pay periods. = $800 ÷ 8</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$100</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get the total earnings for that period. = $1,000 + $100</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,100</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Robyn’s total earnings for that period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$197</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount previously withheld for the period from the amount at step 3. = $197 − $162</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$35</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 8 × $35.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$280</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Robyn’s gross earnings for the current pay period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$197</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the withholding on the additional payment (step 5) to the withholding on Robyn’s gross earnings (step 6) to work out the total withholding for the current pay period. = $197 + $280</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$477</td></tr></tbody></table>As Robyn has an accumulated HELP debt, her employer also needs to calculate a withholding amount from the back payment for HELP. They use the same method as they used to calculate withholding for the back payment in the first part of this example.Study and training support loan (HELP) component – for Example 2<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out how much of Robyn’s additional payment applied to each earlier pay period in the current financial year. In this example it is $800 over eight pay periods. = $800 ÷ 8</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$100</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total normal earnings for that period. = $1,000 + $100</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,100</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for HELP from Robyn’s total normal earnings for that period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$28</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount previously withheld for the period from the amount at step 3. = $28 − $10</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$18</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the HELP withholding on the additional payments. As it is the same amount for each pay period in this example, it will be 8 × $18.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$144</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for HELP from Robyn’s gross earnings for the current pay period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$28</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the HELP withholding on the additional payment (step 5) to the withholding on Robyn’s gross earnings (step 6) to work out the withholding for HELP for the current period. = $28 + $144</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$172</td></tr></tbody></table>Calculate the total PAYG withholding amount for the current pay period.Add the amounts to be withheld:■ PAYG withholding on gross earnings in the current pay period = $197■ HELP withholding on gross earnings in the current pay period = $28■ PAYG withholding on additional payment = $280■ HELP withholding on additional payment = $144The total PAYG withholding is $649 ($197 + $28 + $280 + $144).</td></tr></tbody></table> ``` <table cellspacing="0" cellpadding="0" style="border-collapse:collapse"><tbody><tr><td style="border-top:2.25pt solid #808080; border-right:0.75pt solid #ffffff; border-left:0.75pt solid #ffffff; border-bottom:0.75pt solid #ffffff; padding-right:9.62pt; padding-left:9.62pt; padding-bottom:9.9pt; vertical-align:top; background-color:#99ccff">Example 3: Withholding from a lump sum payment in arrears using Method B(ii)Mary is employed by Minercorp Pty Ltd and receives a fortnightly salary of $1,800. She is entitled to an allowance from her employer when working in remote areas. In 2018, Mary worked in a remote area for six months, but she was not paid this allowance. The total allowance that she should have been paid for this period was $2,480. Her employer discovers their oversight and agrees to pay her the $2,480 as a lump sum payment in arrears on 10 November 2020. Her gross earnings for pay period 10 is $1,800.Mary has received normal earnings (year to date) of $18,000 including the current pay. The amount Mary’s payer must withhold from this payment is calculated using Method B(ii) as follows:Method B(ii) instruction – for Example 3<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Calculate Mary’s average total earnings over the current financial year to date (including current pay). = $18,000 ÷ 10</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,800</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Mary’s average total earnings in step 1.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$254</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add all additional payments made to Mary in the current financial year if Method B(ii) was used to calculate the withholding, to the additional payment in the current pay. Mary’s additional payment of $2,480 is then divided by the number of pay periods in the financial year. = $2,480 ÷ 26</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$95</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the amount at step 3 to the average total earnings at step 1. = $1,800 + $95</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,895</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from the amount at step 4.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$286</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount at step 2 from the amount at step 5. = $286 − $254</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$32</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the amount in step 6 by the number of pay periods used in step 3. = $32 × 26</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$832</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">8</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding on the additional payment. = $832 − $0</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$832</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">9</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the additional payment being made in the current pay period by 47%. = $2,480 × 47%</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,165</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">10</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the lesser amount of step 8 and step 9 for the withholding on the additional payment. Ignore any cents. = $832. This amount is used as it’s less than step 9.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$832</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">11</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from the payee’s gross earnings (excluding additional payments) for the current pay period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$254</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">12</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out the total PAYG withholding for this pay period by adding the withholding on the additional payment (step 10) to the withholding on the gross earnings (step 11). = $832 + $254</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,086</td></tr></tbody></table></td></tr></tbody></table> ``` <table cellspacing="0" cellpadding="0" style="border-collapse:collapse"><tbody><tr><td style="border-top:2.25pt solid #808080; border-right:0.75pt solid #ffffff; border-left:0.75pt solid #ffffff; border-bottom:0.75pt solid #ffffff; padding-right:9.62pt; padding-left:9.62pt; padding-bottom:9.9pt; vertical-align:top; background-color:#99ccff">Example 4: Withholding using Method B(i) and Method B(ii)Pablo, who has an accumulated Financial Supplement debt, is employed by Macropayers Pty Ltd. On 1 November 2020, he received a salary increase of $5 an hour, taking his gross monthly salary from $4,400 to $5,200. His employer agreed that the increase would be backdated to 1 August 2019 and paid at the end of November 2020.This means that the back payment of salary covers 15 pay periods. The total back payment of salary is $12,000. To work out the total amount to be withheld from the back payment to Pablo, his employer will need to calculate the amount accrued in both:the current financial year (4 pay periods from 1 July to October 2020) = $3,200a prior financial year (11 pay periods from 1 August 2019 to 30 June 2020) = $8,800.You don’t need to complete some steps if both Methods B(i) and (ii) are used in the calculations.Method B(i) – PAYG withholding component – for Example 4<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out how much of Pablo’s additional payment applied to each earlier pay period in the current financial year. In this example it is $3,200 over four pay periods. = $3,200 ÷ 4</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$800</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total earnings for that period. = $4,400 + $800</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,200</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Pablo’s total earnings for that period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,001</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount previously withheld for the period from the amount at step 3. = $1,001 − $724</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$277</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 4 × $277.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,108</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as withholding is also calculated using Method B(ii).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as withholding is also calculated using Method B(ii).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr></tbody></table>As Pablo has an accumulated Financial Supplement (FS) debt, his employer will need to calculate a withholding amount from the back payment for FS. They use the same method as they used to calculate withholding for the back payment in the first part of this example.Method B(i) – FS component – for Example 4<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Work out how much of Pablo’s additional payment applied to each earlier pay period in the current financial year. In this example it is $3,200 over four pay periods. = $3,200 ÷ 4</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$800</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">For the first affected pay period, add the additional payment relevant to that period to the normal earnings previously paid to get total normal earnings for that period. = $4,400 + $800</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,200</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for FS from Pablo’s total normal gross earnings for that period.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$156</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount previously withheld for the period from the amount at step 3. = $156 − $43</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$113</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the FS withholding on the additional payment. As it is the same amount for each pay period in this example, it will be 4 × $113.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$452</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as withholding is also calculated using Method B(ii).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as withholding is also calculated using Method B(ii).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr></tbody></table>Method B(ii) – PAYG withholding component – for Example 4<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Calculate Pablo’s average total earnings, which in this example is = (salary earnings to date + current financial year additional payments to date) ÷ number of pay periods = [($4,400 + $4,400 + $4,400 + $4,400 + $5,200) + $3,200] ÷ 5 = $26,000 ÷ 5</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,200</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from Pablo’s average total earnings in step 1.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,001</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add all additional payments made to Pablo in current financial year where Method B(ii) was used to calculate the withholding, to the additional payment in current pay. Then divide by the number of pay periods in the financial year. = $8,800 ÷ 12</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$733</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the amount at step 3 to the average total earnings at step 1. = $5,200 + $733</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,933</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld from the amount at step 4.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$1,257</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount at step 2 from the amount at step 5. = $1,257 − $1,001</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$256</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the amount in step 6 by the number of pay periods used in step 3. = $256 × 12</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$3,072</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">8</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding on the additional payment. = $3,072 − $0</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$3,072</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">9</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">10</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">11</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">12</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not required as final calculations for withholding limit and total withholding will be made after FS component is calculated.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr></tbody></table>As Pablo has an accumulated Financial Supplement debt his employer will need to calculate the withholding amount from the back payment for FS. They use the same method as they used to calculate withholding for the back payment in the first part of this example.Method B(ii) – FS component – for Example 4<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">1</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Calculate Pablo’s average total earnings, which in this example is: = (salary earnings to date + current financial year additional payments to date) ÷ number of pay periods = [($4,400 + $4,400 + $4,400 + $4,400 + $5,200) + $3,200] ÷ 5 = $26,000 ÷ 5</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,200</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">2</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for FS on Pablo’s average total earnings in step 1.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$156</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">3</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add all additional payments made to Pablo in current financial year where Method B(ii) was used to calculate the withholding, to the additional payment in current pay. Then divide by the number of pay periods in the financial year. = $8,800 ÷ 12</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$733</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">4</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Add the amount at step 3 to the average total earnings at step 1. = $5,200 + $733</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$5,933</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">5</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the relevant tax table to find the amount to be withheld for FS from the amount at step 4.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$238</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">6</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract the amount at step 2 from the amount at step 5. = $238 − $156</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$82</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">7</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the amount in step 6 by the number of pay periods used in step 3. = $82 × 12</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$984</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">8</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7 for the withholding for FS on the additional payment. = $984 − $0</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$984</td></tr></tbody></table>Withholding limit (including FS component) – for Example 4<table cellspacing="0" cellpadding="0" style="border:0.75pt solid #000000; border-collapse:collapse"><tbody><tr><td style="border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Step</td><td style="border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Instruction</td><td style="border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Result</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">9</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Multiply the additional payment being made using Method B(ii) in the current pay period by 47%. = $8,800 × 47%</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$4,136</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">10</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">Use the lesser amount of step 8 (combined) and step 9 for the withholding on the additional payment. Ignore any cents. Combine the two step 8 results. = $3,072 + $984 = $4,056 This amount is used as it’s less than step 9.</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">$4,056</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">11</td><td style="border:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not applicable as total withholding for the current pay period will need to include amounts calculated in Method B(i).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; border-bottom:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr><tr><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">12</td><td style="border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">This step is not applicable as total withholding for the current pay period will need to include amounts calculated in Method B(i).</td><td style="border-top:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:top">–</td></tr></tbody></table>Calculate the total PAYG withholding amount for the current pay period.Add the amounts to be withheld:Withholding on gross earnings current pay period■ PAYG withholding on gross earnings in the current pay period = $1,001■ FS withholding on gross earnings in the current pay period = $156Method B(i) withholding■ PAYG withholding on additional payment for current financial year = $1,108■ FS withholding on additional payment for current financial year = $452Method B(ii) withholding■ PAYG withholding on additional payment for prior financial year = $3,072■ FS withholding on additional payment for prior financial year = $984Total PAYG withholding is $6,773 ($1,001 + $156 + $1,108 + $452 + $3,072 + $984).</td></tr></tbody></table> ```

Step	Instruction
1	Work out how much of the back payment applied to each earlier pay period in the current financial year.
2	For the first affected pay period, add the back payment relevant to that period to the normal earnings previously paid to get total earnings for that period.
3	Use the relevant tax table to find the amount to be withheld from the total earnings for that period.
4	Subtract the amount previously withheld for the period from the amount at step 3.
5	Repeat steps 2–4 for each pay period affected. Total the amounts calculated in step 4 for each pay period for the withholding on the back payment.
6	Use the relevant tax table to find the amount to be withheld from your employee’s gross earnings (excluding additional payments) for the current pay period.
7	Work out the total PAYG withholding for the current pay period by adding the withholding on the back payment (step 5) to the withholding on the gross earnings (step 6).

Sch 5– Tax table for back payments, commissions, bonuses and similar payments

Get a plain-English read of Sch 5

Step	Instruction
1	Work out your employee’s gross earnings excluding any additional payments for the current pay period. Ignore any cents.
2	Use the relevant tax table to find the amount to be withheld from your employee’s gross earnings in step 1.
3	Add any additional payments to be made in the current pay period together and divide the total by the number of pay periods in the financial year (that is, 52 weekly pay periods, 26 fortnightly pay periods or 12 monthly pay periods). Ignore any cents.
4	Add the amount at step 3 to the gross earnings at step 1.
5	Use the relevant tax table to find the amount to be withheld from the amount at step 4.
6	Subtract the amount at step 2 from the amount at step 5.
7	Multiply the amount at step 6 by the number of pay periods used in step 3.
8	Multiply the additional payment being made in the current pay period by 47%.
9	Use the lesser amount of step 7 and step 8 for the withholding on the additional payment. Ignore any cents.
10	Work out the total PAYG withholding for the current pay period by adding the withholding on the additional payment (step 9) to the withholding on the gross earnings (step 2).

Step	Instruction
1	Calculate the average total earnings paid to your employee over the current financial year to date. Ignore any cents.
2	Use the relevant tax table to find the amount to be withheld from the average total earnings in step 1.
3	Add all additional payments made in the current financial year if Method B(ii) was used to calculate the withholding, to the additional payment in current pay. Then divide by the number of pay periods in the financial year (that is, 52 weekly pay periods, 26 fortnightly pay periods or 12 monthly pay periods). Ignore any cents.
4	Add the amount at step 3 to the average total earnings at step 1.
5	Use the relevant tax table to find the amount to be withheld from the amount at step 4.
6	Subtract the amount at step 2 from the amount at step 5.
7	Multiply the amount in step 6 by the number of pay periods used in step 3.
8	Subtract any amounts previously withheld from additional payments in the current financial year if Method B(ii) was used, from the amount at step 7.
9	Multiply the additional payment being made in the current pay period by 47%.
10	Use the lesser amount of step 8 and step 9 for the withholding on the additional payment. Ignore any cents.
11	Use the relevant tax table to find the amount to be withheld from your employee’s gross earnings (excluding additional payments) for the current pay period.
12	Work out the total PAYG withholding for this pay period by adding the withholding on the additional payment (step 10) to the withholding on the gross earnings (step 11).