Small Business Resources
A guide to tax tables: weekly, fortnightly and monthly
4 min read
As an employer in Australia, you are required to withhold some of your employees’ wages and send it to the ATO on their behalf to meet their end-of-year tax liabilities.
The good news is that the ATO produces a range of tax tables that make it easy for you to work out exactly how much to withhold from your employee payments. Whether you pay your employees weekly, fortnightly or monthly, the ATO tax tables clearly indicate how much pay withholding you need to send to the ATO per dollar amount your employees earn.
What is PAYG?
Pay As You Go (PAYG) withholding is a system of withholding income tax from an employee or contractor’s salary or wages. It allows employers to vary the amount of tax that is withheld from employees on each payment instalment, withholding some of this to anticipate the end of year tax liability. To avoid paying a large tax bill at end of financial year, the instalments are spread throughout year making it easier to meet taxation obligations.
If the amount withheld is more than the actual tax payable, the employee will get a tax refund, or they might need to supplement if there’s a shortfall.
The ATO specifies how much employers need to withhold in their PAYG tax tables and the withholding is called ‘PAYG withholding’.
Do you need to be PAYG Withholding?
If you are a business owner, you are obliged to withhold amounts from payments that you make to:
- Your employees
- Other workers such as contractors, that you have voluntary agreements with
- Businesses that don’t quote their Australian business number (ABN).
To start paying PAYG for your employees, you’ll need to register with the ATO through their online business portal. After you have calculated and paid withheld amounts, you need to report these amounts on your activity statements. You also need to provide PAYG withholding summaries to all employees and lodge a PAYG withholding annual report.
You must register for PAYG withholding before you are first required to make a payment that is subject to withholding. This is required even if you don’t withhold an amount from a payment made. If you cease to be an employer you should cancel your PAYG withholding registration.
ATO Tax Tables
The ATO produces a range of tax tables to help you work out how much to withhold from payments you make to your employees or other payees. The ATO also has an online tax withheld calculator that calculates the correct amount of tax to withhold.
The most common tax tables that you will need to refer to as an employer are the weekly, fortnightly or monthly tax tables depending on how often you make pay runs.
Using the ATO tax tables below, working out PAYG withholding for your employees is easy.
Weekly tax tables
If you pay your employees on a weekly basis, you will need to use the ATO’s weekly tax table.
Fortnightly tax tables
If you pay your employees on a fortnightly basis, you will need to use the ATO’s fortnightly tax table.
Monthly tax tables
If you pay your employees on a monthly basis, you will need to use the ATO’s monthly tax table.
Single Touch Payroll
Single Touch Payroll (STP) is an ATO compliance regulation that requires employers to send employee payroll information including salary, wages, PAYG withholding and superannuation to the ATO at the same time as their standard pay run. Single Touch Payroll become mandatory for ALL employers on 1 July 2019. Find out more here >
The simplest way to manage payroll processing and PAYG withholding for your employees is through payroll software such as Reckon One Payroll. You can manage wages, leave, super and Single Touch Payroll for just $7/month.
Our software makes it simple to remain compliant and stay up to date with the latest payroll and tax compliance changes. Automated updates such as PAYG tax-tables, superannuation guarantee rates and SuperStream requirements are automatically pushed into Reckon One Payroll.