Depending on the frequency with which you pay your employees, you’ll need to refer to either weekly tax tables, fortnightly tax tables or monthly tax tables.
As an employer in Australia, you’re required to withhold some of your employees’ wages on their behalf and send that portion to the Australian Tax Office (ATO) to meet their end-of-year tax liabilities.
Tax tables will help determine exactly how much pay to withhold and direct to the ATO.
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 withholding?
Pay as you go (PAYG) withholding is an integral system of withholding income tax from an employee or contractor’s salary or wages, helping you remain compliant with the ATO.
PAYG allows employers to vary the amount of tax that’s withheld from employees on each payment installment, withholding some of this to anticipate their end of year tax liability. To avoid paying a large tax bill at end of financial year and making it easier to meet taxation obligations, the installments are spread throughout the year.
The ATO specifies how much employers need to withhold in their PAYG tax tables, and the withholding is called ‘PAYG withholding’.
PAYG and BAS
PAYG also factors into your business activity statements (BAS). When you file your BAS, you’re obliged to provide details about employee payments and the tax you withheld.
Do you need to be PAYG Withholding?
If you’re a business owner, you’re 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 and via Single Touch Payroll every time you pay your employees.
Tax Tables
The ATO produces a range of tax tables to help you work out how much to withhold from employee payments or other payees. The ATO has an online tax withheld calculator that gives you the correct amount of tax to withhold.
The most common tax tables that you’ll 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 table
If you pay your employees on a weekly basis, you’ll need to use the ATO’s weekly tax table.
Fortnightly tax table
If you pay your employees on a fortnightly basis, you’ll need to use the ATO’s fortnightly tax table.
Monthly tax table
If you pay your employees on a monthly basis, you’ll 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 became mandatory for ALL employers on 1 July 2021. Find out more about Single Touch Payroll.
Payroll software
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 directly from your Payroll software.
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.
