PAYG Withholding Calculator (ATO-aligned)
Estimate the tax (PAYG) to be withheld from your pay based on ATO guidelines. Essential for employees and employers.
Quick Use Samples
PAYG Withholding
Withholding Results
Deductions Breakdown
Based on a gross income of $2,000.00 per fortnightly. You are claiming the tax-free threshold, which means the first $18,200 of your annual income is not taxed. The estimated total withholding is $343.35. This includes income tax of $283.35, a Medicare levy of $40.00, and a HECS-HELP repayment of $20.00.
Gross Pay Breakdown
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What is PAYG Withholding?
PAYG (Pay As You Go) Withholding is Australia's system for pre-paying your estimated income tax throughout the year. Your employer withholds a portion of each paycheque and sends it to the ATO on your behalf. This calculator provides an estimate of the amount that will be withheld, based on ATO tax tables.
Behind the Formula
The calculator uses a simplified version of the ATO's tax tables. It annualises your pay to determine your marginal tax bracket, then calculates the tax for that pay period. It also adds the 2% Medicare Levy and any compulsory HECS-HELP repayments. The calculation depends heavily on whether you have claimed the tax-free threshold.
Expert Insights
- The tax-free threshold ($18,200 per year) is the most important factor in this calculation. You should only claim it from one employer (your main job). Claiming it from a second job will result in significant under-taxation and a likely tax bill.
- This withholding is just an estimate. Your final tax liability is only determined when you lodge your tax return. Any difference between tax withheld and tax owed is settled then, resulting in a refund or a bill.
- Allowances, bonuses, and other extra payments are also subject to withholding, often at a different rate. This calculator is best used for estimating tax on your regular, base salary.
Actionable Tips
- Check your first payslip from a new job to ensure your withholding looks correct. If it seems too low or too high, confirm with your payroll department that they have your correct TFN declaration details.
- If you have two jobs, use this calculator to estimate the tax on your second job (making sure to untick 'claim tax-free threshold') to understand how much will be withheld.
- If you consistently get a large tax refund, you may be able to apply for a PAYG Variation to have less tax withheld, improving your cash flow throughout the year.
Real-World Examples
A full-time worker
Someone earning a gross fortnightly pay of $3,000 will have tax, Medicare, and HECS withheld, resulting in a take-home pay of around $2,200. The calculator shows how this is broken down.
A student with a part-time job
A student earning $500 a week claims the tax-free threshold. As their annual income is below $18,200, no income tax is withheld, only the Medicare levy portion, resulting in a higher take-home percentage.
Someone with a second job
An individual has a second job earning $400 a week. Because they don't claim the tax-free threshold, a higher proportion of tax is withheld from this pay to account for their higher overall income, preventing a tax debt.
Glossary of Terms
Tax File Number (TFN) Declaration
A form you provide to your employer that tells them your TFN and whether to claim the tax-free threshold, which determines how much tax they withhold.
Tax-Free Threshold
The first $18,200 of your income which is not taxed. You should only claim this from one employer.
Medicare Levy
A 2% levy on your taxable income that helps fund Australia's public healthcare system.