Yearly tax table AUS: Guide to tax withholding & tax brackets in Australia

Calculating taxes is one of the not-so-glamorous aspects of starting a business. First, you have to determine how to calculate taxes, and then you have to actually crunch the numbers and your cash flow plan. It’s far from relaxing.

As an employer, you need to know how much to withhold from your employees for tax purposes before you pay them in order to meet your obligations to the Australian Taxation Office (ATO). Depending on how frequently you pay your employees, different tax tables may apply. 

Whether you want to know how to tabulate fortnightly tax or how to calculate the hourly rate from an employee’s annual salary, there are plenty of resources available.

Tax tables are a useful way for you to determine exactly how much to withhold from payments made to employees or other payees.

The ATO provides weekly, fortnightly, and monthly tax tables as well as a tax table for daily and casual workers. We’ve also put together easy-to-read guides to tax withholding based on weekly, fortnightly, and monthly tax tables. The tax guide below provides you with more information about yearly tax tables as these are harder to locate on the ATO website. In addition, this guide will provide information on how these tax tables are utilised together with a clear example, PAYG obligations you have as an employer, a useful checklist for PAYG withholding, what you need to understand about how income is taxed, and details on Single Touch Payroll.

How to use the annual tax table

The annual tax table below outlines the calculation of tax due based on specified taxable income brackets. 

However, from 1 July 2024, the new tax brackets will be:

The average Australian’s tax liability

The average annual salary in Australia is $67,860. The following annual tax table breaks down the average Australian's tax liability annually, as well as provides weekly, fortnightly, and monthly breakdowns until July 2024.

However, from 1 July 2024, this will look like:

Calculating the hourly rate from annual salary

If you want to know how to calculate the hourly rate from annual salary, it's as simple as dividing an employee's weekly pay by the number of days worked in a typical workweek and then dividing that number by the number of hours worked each day. 

Example of a calculation using the ATO’s yearly tax table

Using the ATO’s yearly tax table, let’s consider an example based on the average Australian salary. Assuming a worker works five eight-hour days, their hourly rate is $30.12 before taxes and $28.12 after taxes. Therefore, the average hourly take-home rate will be $28.12.

In Australia, you don't need an official yearly tax table as the ATO provides a variety of tables. You only need to update your tax table yearly if the tax brackets change. 

Additionally, you can use the ATO's tax calculator to determine the correct amount of PAYG withholding you need to pay. All tax withholding should be settled and paid before tax returns are filed.

What is PAYG?

Pay as you go (PAYG) is a system designed to withhold amounts from an employee’s pay to cover their end-of-year tax liabilities.

As an employer, you are required to register with the ATO for PAYG and then withhold amounts monthly on behalf of your employees. It is important to note that even though tax is withheld, the employee is responsible for submitting their individual tax returns, which will consider all of their taxable income and applicable deductions.

The ATO provides guidelines specifying how much an employer needs to withhold through PAYG withholding tax tables. These withholding amounts vary depending on the applicable income tax rates. This process is referred to as PAYG withholding. Additionally, if your employees are contributing money towards superannuation, you may need to manage PAYG superannuation income streams through an additional form.

PAYG obligations as an employer

As an employer, fulfilling your PAYG obligation involves several steps.

The process

• Registration: Begin by registering with the ATO. This may be done through your tax agent or through the ATO’s online business portal.
• Calculation and reporting: Calculate and report the withheld amounts to the ATO through your Business Activity Statement (BAS) lodgement.
• Payment: Pay the withheld amounts to the ATO.
• Employee notification: Provide PAYG payment summaries to all employees.
• Annual reporting: Lodge a PAYG withholding annual report with the ATO (not required if you carry out reporting under Single Touch Payroll (STP))

Common categories of individuals to withhold from

• Employees
• Directors
• Workers whom you have a voluntary agreement with
• Contractors or businesses that do not quote their Australian Business Number (ABN)

Employer actions when an employee leaves or retiresWhen an employee leaves the organisation or retires, the employer must take the following actions:

• Make any final or outstanding PAYG withholding payments
• Complete an employee termination payment
• Send a payment summary to the affected employee
• Retain a record of the PAYG withholding

If you encounter any unique circumstances, it’s advisable to seek assistance from a financial advisor or the ATO.

Employer checklist for PAYG tax withholding

Outlined below are several key steps for the entire PAYG process:

1. Register with the ATO
2. Add up your employee’s annual income
3. Use the annual tax table provided above to work out the tax withholding amount
4. Pay the relevant amount of tax
5. Report the amount on your BAS
6. Provide a summary to your employee
7. Lodge an annual withholding report

Using the annual tax table simplifies the process, but you must ensure that you check for any other tables or information required for accurate calculations, such as Medicare levy adjustments.

For more tips, view the Quickbooks How to: Record PAYG amount below.

For a one-stop seamless solution, use QuickBooks Payroll powered by Employment Hero to simplify this process.

ATO Tax Tables

The ATO offers a variety of tax tables to assist you in determining how much to withhold from payments to your employees or any other payees. Additionally, new tax tables have recently been introduced for study and training support loans, replacing previous tables for the Higher Education Loan Program (HELP), Trade Support Loan (TSL), Student Start-up Loan (SSL) and Student FInancial Supplement Scheme (SFSS).

If you employ individuals on holiday in Australia, the tax table for working holiday makers will apply.

In addition, the ATO also provides an online tax withheld calculator which can calculate the correct amount of tax to withhold. Separate calculators are available for employees and contractors. To use the calculators, you will need information provided by employees in their tax file declaration, a withholding declaration, and a Medicare levy variation declaration.

Choose the corresponding ATO tax tables that correspond with how often you make pay runs:

• weekly tax tables
• fortnightly tax tables
• monthly tax tables

Important information to note when using ATO tax tables

Applicable tax tablesTake note that the annual tax tables will also apply when making payments for the following:

• Paid parental leave
• Directors’ fees
• Payments to labour-hire workers
• Payments to religious practitioners
• Payments to government education and training
• Compensation, sickness, accident or other leave payments
• Payments to foreign residents

Select the table that corresponds with the frequency of these payments. Please also take note that other tax tables may apply based on whether payments are made to shearers, workers in the horticultural industry, performing artists, casual employees and those on working holidays.

Employee with accumulated debtIf your employee has an accumulated debt (e.g. HELP, SSL or TSL), you will need to use the HELP, SSL or TSL tables. If your employee is entitled to make an adjustment for the Medicare levy, you will need to use the adjustment tax tables.

Employee entitled to a tax offsetIf your employee is entitled to a tax offset, you will need to use the ATO’s Ready reckoner for tax offsets. This assists in converting their estimated annual entitlement into a monthly figure that you can subtract from the withholding amount.

Single Touch Payroll

Single Touch Payroll (STP) is the primary method for paying employees and reporting payroll. With STP, employee wages, including PAYG, are reported to the ATO at every pay run, rather than at the end of the financial year.STP commenced:

• on 1 July 2018 for employers with 20 or more employees 
• on 1 July 2019 for employers with less than 20 employees

All employers are required to report through STP at each pay period. For more ease, convenience and accuracy, become STP compliant with the help of Quickbooks payroll software.

How taxes get less taxing

While taxes may not be your favourite task, they do not have to be difficult nor tiresome. With a better understanding of the various tax methods, managing taxes can be just another item on your monthly to-do list as a small business owner.

This frees you to focus on more pressing matters, such as growing your business, serving your customers, and enjoying the unparalleled freedom that comes with running your own company. If you ever need assistance, don’t hesitate to contact the ATO, seek professional advice from a ProAdvisor or hire a professional accountant to do your taxes for you.

Accounting software such asQuickBooks cando the heavy lifting for you. With QuickBooks Online, you can manage your taxes, deductions and PAYG withholding easily. Sign up for QuickBooks today with a free 30-day trial. 

Disclaimer: This page is provided for general information purposes only and does not constitute accounting, tax, business, or legal advice. You should always consult your own advisors for advice relating to your business or situation. Always consult the ATO directly as information changes from time to time: https://www.ato.gov.au/rates/tax-tables/.