How Much Tax Should Be Taken From My Pay?

Why is tax taken from your pay?

Payers, such as employers, are required to withhold tax from the payments they make to you and send those payments to us regularly. When you lodge your tax return at the end of the financial year, you will be entitled to a credit for the amount of tax that has been withheld from your pay. This amount is shown on your payment summary.

Your payer works out how much tax to withhold based on information you provide in your Tax file number declaration and Withholding declaration

Withholding rates are calculated on the basis that, if your pay and circumstances remain consistent throughout the year, you may be entitled to a small refund when you complete your tax return at the end of the financial year.

This system is called pay as you go (PAYG) withholding.

Tax withheld calculator

A simple way of working out how much tax should be withheld from your pay is to use the Tax withheld calculator. This takes into account:

  • whether you are a resident or non-resident
  • Medicare levy exemptions or reductions
  • tax offsets
  • amounts you may be required to repay under the Higher Education Loan Program (HELP) or the Student Financial Supplement Scheme (SFSS)
  • tax-free threshold and income tax rates
  • leave loading.

It does not take into account the special rates for:

  • actors, variety artists and other entertainers
  • people employed in the shearing industry
  • people seasonally employed in the horticultural industry
  • people employed in the Joint Petroleum Development Area
  • members of the Defence Force
  • the following types of payments
    • employment termination payments (ETPs)
    • lump sum payments in arrears
    • return-to-work payments
    • super income streams
    • super lump sums
    • unused leave payments on termination of employment
    • commission payments
    • non-super income.

Tax tables

You can also use the PAYG withholding tax tables to calculate the amount that should be withheld from your pay. Each table includes instructions, which you must follow carefully to calculate the correct amount of tax.

Which table or tables you will need depends on:

  • whether you are a resident or non-resident for tax purposes (if you are unsure, refer to Work out your tax residency)
  • whether you are employed in a specific industry
  • whether you are receiving certain types of payments to which concessional rates of tax are applied
  • how often you are paid
  • whether you have an accumulated HELP or Financial Supplement debt
  • whether you are entitled to a reduction in the rate of Medicare levy.

For more information on myTax 2019, online tax return 2019, myGov 2019, Tax Return 2019 , or any other tax related matter, please call our professional accountant on 1300 768 284 . For more information please contact us at 1300768284 or you can email us at enquiry@taxrefundonspot.com.au

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