Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:7:p2
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 7 (pt 2/3)
Character Range: 164523–167249

are rounded to the nearest dollar. Results ending in 50 cents or higher are rounded upwards. If a TFN is not provided, ignore cents when calculating withholding amounts.

Marginal rate calculation

To work out the marginal rate, you must:

   1. Using the relevant PAYG withholding tax table at ato.gov.au/taxtables, work out the amount to withhold from your employee's normal gross earnings for a regular pay period.
   2. Divide the amount of the payment by the number of normal pay periods in 12 months (12 monthly payments, 26 fortnightly payments or 52 weekly payments).
   3. Ignore any cents.
   4. Add the amount at step 3 to the normal gross earnings for a single pay period.
   5. Use the same PAYG withholding tax tables used at step 1 to work out the amount to withhold for the amount at step 4.
   6. Subtract the amount at step 1 from the amount at step 5.
   7. Multiply the amount obtained at step 6 by the number of normal pay periods in 12 months (12 monthly payments, 26 fortnightly payments or 52 weekly payments).

Do not withhold any amount for study and training support loans.

Normal gross earnings

Normal gross earnings are all payments, except those relating to termination payments, received in the last full pay period of employment. This includes taxable allowances, overtime and bonuses. Therefore, your employee's normal gross earnings should be taken to be the earnings relating to the last full pay period worked.

Where your employee's pay fluctuates significantly over a number of pay periods, we will accept an average of gross taxable earnings for the financial year to date over the number of pays received.

The following example uses the Weekly tax table at ato.gov.au, effective from 1 July 2024.
Example:

Sandra retires on 31 December 2024. She qualified for long service leave after 10 years of service, with further leave accruing on each completed year of service.

She is not leaving because of genuine redundancy, invalidity or under an early retirement scheme.

Sandra also receives her normal weekly earnings of $1,155. She has quoted her TFN and has claimed the tax-free threshold. Therefore, the amount withheld is calculated using column 2 of the Weekly tax table.

Details of payment for long service leave:

    * Pre-16 August 1978 component = $3,690.00
    * 16 August 1978 to 17 August 1993 component = $7,700.00
    * Post-17 August 1993 component = $10,890.00

Amounts to be withheld:

    * Pre–16 August 1978 component subject to withholding

    = $3,690.00 × 5% = $184.50

  The marginal rate calculation is used to work out the amount to be withheld from the pre-16 August 1978 component.

    * 16 August 1978 to 17 August 1993 component

    = $7,700.00 ×