As a business owner in Australia, you’ve got a lot on your plate. From managing staff to keeping the books in order, it’s easy to feel overwhelmed. One important thing about running a business is understanding the ATO’s weekly tax table and how it applies to you.

The weekly tax table is influenced by income tax rates, which determine the amount of tax withheld from employees’ wages. In this article, we’ll break it down so you can stay on top of your taxes and keep your business humming.

What is the Weekly Tax Table 2025?

The Australian Taxation Office (ATO) provides the weekly tax table and shows how much tax to withhold from your employees’ weekly pay. The ATO produces tax tables for different payment frequencies: weekly, fortnightly and monthly.

The ATO also provides other tax tables for different types of payments and employee circumstances. Using the right table means you can ensure you’re withholding the right amount of tax from your employee’s wages. The PAYG withholding tax tables help employers determine the correct amount of tax to withhold from employee payments, ensuring compliance with tax obligations.

How to Use Weekly Tax Tables

1. Calculate your employee’s gross weekly earnings and taxable income. This includes their base wage plus any allowances, bonuses or overtime pay.
2. Check if your employee claims the tax-free threshold. This is the amount of income an individual can earn before paying tax. For the 2024-25 financial year, the tax-free threshold is $18,200.
3. Find your employee’s earnings and threshold status in the weekly tax table to determine the withholding amount.

Your employee earns $1,500 weekly and claims the tax-free threshold. According to the ATO’s weekly tax table for 2024-25, you would withhold $192 from their weekly pay.

The weekly tax table applies to various payments, including parental leave and compensation. The ATO provides separate tax tables for foreign residents and working holidaymakers.

Specialised Weekly Tax Tables and Employee Circumstances

While the standard tax tables work for most employees, several scenarios require using alternative tax tables or adjusting the standard withholding calculations. Payroll administrators must understand these specialised cases to ensure accurate employee withholdings. The Medicare levy can also impact tax withholding calculations, necessitating the correct ATO tax tables based on employees’ tax file numbers and Medicare levy variation declarations.

Tax Offsets for Low-Income Earners

Low-income employees may be eligible for tax offsets that reduce their tax liability. Payroll should refer to the “Ready reckoner for tax offsets” published by the ATO to account for these offsets. This table provides the withholding adjustment amounts based on the employee’s annual income and pay frequency. The appropriate offset amount should be subtracted from the standard withholding amount.

For example, if an employee earning $41,000 annually is paid weekly, the ready reckoner shows a weekly tax offset of $15. If the standard tax table indicated withholding $120, the actual amount withheld would be $120 – $15 = $105.

Employees with Study and Training Loans

Employees who have outstanding Higher Education Loan Program (HELP), Student Start-up Loan (SSL), or Trade Support Loan (TSL) balances are required to make compulsory repayments via their PAYG withholdings once their income exceeds the minimum repayment threshold.

To calculate the additional withholding amounts, employers must use the specific tax tables for each type of loan:

1. HELP and SSL table
2. TSL table

The employee’s Pay Scale Code should indicate if they have an applicable loan. The tax tables show the withholding rates based on the employee’s repayment income bracket.

Note that these additional loan repayment withholdings are in addition to the standard PAYG withholdings, not in place of them.

Foreign Residents and Working Holidaymakers

Employees who are foreign residents for tax purposes, including working holidaymakers, are subject to different tax rates than Australian residents. As such, their withholdings need to be calculated using the “Foreign resident tax table”.

This table has different income brackets and tax rates than the standard resident tables. There is no tax-free threshold, meaning withholdings start from the first dollar earned.

Working holidaymakers are typically on 417 or 462 visas. They are taxed at a flat rate of 15% up to $45,000 earned in the country. Use the foreign resident table once their income exceeds this threshold.

Getting Started with PAYG Withholding

Before you make your first payment to an employee, you’ll need to register for PAYG withholding through the ATO Online Services portal. If you’re a sole trader without employees, you generally won’t need to register unless you’re working with contractors who don’t have ABNs.

For those without an ABN (like households employing nannies), you’ll need to complete Form NAT 3377. Once registered, keep your ATO reference number for your records. It is also important to ensure that employees complete a withholding declaration to notify you of their tax file number and any tax offsets they wish to claim, which helps in calculating the correct withholding amounts based on their specific factors.

Calculating Gross Weekly Earnings

The first step in the withholding process is determining your employee’s gross weekly earnings. This includes:

• Base wages
• Allowances (such as travel or tool allowances)
• Overtime payments
• Bonuses

However, not everything you pay your employees counts toward their gross earnings. You should exclude reimbursements for work-related expenses (like travel costs at reasonable rates) and exempt portions of car or living-away-from-home allowances. For example, if you’re paying an employee a weekly wage of $1,500 plus a $200 tool allowance, their gross earnings would be $1,700.

Using Tax Tables Correctly with PAYG

Once you’ve calculated gross earnings, you’ll need to determine the correct amount to withhold using the ATO’s tax tables.

If your employee has claimed the tax-free threshold (typically their primary job), use the “tax-free threshold” column in the tables. For secondary jobs or non-resident employees, you’ll need to use the “no tax-free threshold” column instead.

There are special cases to keep in mind:

• Working holidaymakers have their own specific tax rates, with 15% applying to earnings up to $45,000 and 30% above that You can view that tax table here.
• For employees with HELP or SSL debts, you’ll need to make additional withholdings using the “Study and training support loans” tax table, available here.

Reporting and Payment Requirements

Your Business Activity Statement (BAS) needs to include several key pieces of information when it comes to the weekly tax tables and payroll you implement:

• Total payments made (using our earlier example, this would be $1,700)
• The amount you’ve withheld (for instance, $192 from a $1,500 base wage)
• Any amounts withheld from contractors without ABNs

Remember, payment deadlines vary based on your withholding amounts, too:

• Small withholders (less than $25,000 per year) make quarterly payments by the 28th of October, February, April, and July
• Medium withholders need to pay monthly by the 21st

Streamlining with Single Touch Payroll

Single Touch Payroll (STP) is a government initiative to streamline payroll reporting. It requires employers to send tax and super information to the Australian Taxation Office each time they run payroll via weekly tax tables. STP Phase 2, which became mandatory for most employers in January 2022, introduced more comprehensive reporting requirements.

Under STP Phase 2, the information that must be reported each pay run has expanded significantly. Some of the key changes relevant to calculating weekly tax withholdings include:

Disaggregated Reporting of Gross Earnings

Employers must now separately report each component of an employee’s gross earnings. This means specifying amounts like:

• Salary and wages
• Bonuses and commissions
• Overtime
• Paid leave
• Allowances
• Director’s fees
• Lump sum payments

This level of detail provides greater transparency about how much income tax should be withheld each week.

Leave Balances and Entitlements

STP Phase 2 also requires reporting employees’ leave balances and other entitlements at the conclusion of each pay period. This includes:

• Sick leave balances
• Annual leave balances
• Long service leave
• Redundancy payments
• Notice periods

While not directly impacting weekly tax calculations, employers need processes in place to accurately capture and report these figures with each weekly pay run.

How Accounting Software Supports STP Phase 2 Compliance

With the increased reporting demands of STP Phase 2, manual payroll processes become extremely difficult and error-prone. Using STP-enabled accounting or payroll software is now essential.

Cloud accounting platforms like Xero, MYOB and QuickBooks have been updated to support STP Phase 2 reporting. These systems automatically track earnings categories and entitlement balances, and then generate the required STP reports with each weekly pay cycle.

This automation greatly reduces the risks of reporting errors and simplifies compliance with the weekly STP obligations. However, it’s still important that the right earnings and entitlement categories are set up in the software from the start.

When processing weekly payroll, be sure to assign the correct income types to each employee’s earnings to ensure accurate STP reporting. Also, confirm that leave is being accrued and reported per the employee’s entitlements.

Managing Employee Exits

When an employee leaves your business, you need to address several payroll and tax obligations. Properly finalising the employee’s pay and providing the required ATO documentation helps ensure compliance and a smooth offboarding process.

Final Pay and Termination Payments

When processing an employee’s final pay, be sure to include all outstanding amounts owed as per the weekly tax table 2025, such as:

• Regular wages up to the termination date
• Accrued but unused annual leave and long service leave
• Redundancy payments (if applicable)
• Notice period payments (if applicable)

Calculate the appropriate tax withholdings on each of these amounts using the relevant weekly tax tables. Some termination payments, like unused leav,e may be taxed at different rates than regular earnings.

Employee Termination Payment (ETP) Summary

If you make an employment termination payment (ETP), such as a redundancy payment, in excess of what the employee is legally entitled to, you’ll need to issue an ETP Payment Summary to the employee by 14 July. This is in addition to their regular Income Statement or Payment Summary.

Use the ATO’s ETP Tax Calculator to determine the taxable and tax-free components of the payment and withhold tax at the applicable ETP tax rates.

Finalising the Employee’s Payroll Records

Once you’ve issued the employee’s final pay, make sure to:

• Provide the employee’s Income Statement or Payment Summary
• Lodge a PAYG report including their final pay details
• Update your employee records and payroll system to reflect the termination
• Retain copies of all relevant documents (e.g., ETP summary, TFN declaration)

The employee’s payroll records must be kept for at least 7 years after the end of the financial year in which the employee exited. Keeping organised records ensures you can provide the required information if the ATO requests.

Lodging the PAYG Withholding Annual Report

After the conclusion of each financial year, employers must submit a PAYG withholding annual report to the ATO by 14 August. This report summarises the total amounts withheld from employee pays over the year.

Be sure to include the details of any terminated employees in this report, even if their employment ended much earlier in the financial year.

Key Takeaways

• The weekly tax table shows how much tax to withhold from your employees’ weekly pay.
• Employers must use tax tables to calculate PAYG withholding amounts.
• Withholding amounts are reported and paid to the ATO through your regular business activity statements.
• Accounting software can automate calculations and help with PAYG and STP compliance.
• Tax offsets can reduce the withholding amounts and should be considered when calculating PAYG withholding.

FAQs

1. What happens if I don’t withhold the right amount of tax from my employees’ pay?

If you don’t withhold the right amount of tax from your employee’s pay, you may get penalties from the ATO. These penalties can be interest on the unpaid amount and administrative penalties for not meeting your obligations. Sometimes, you may also get criminal penalties if the ATO thinks you’ve deliberately avoided your withholding responsibilities.

To avoid this, you must use the correct tax table and correctly calculate the withholding amounts. If you find out you’ve made a mistake, contact the ATO as soon as possible to discuss your options for fixing the error and minimising any penalties.

2. What do I do if my employee’s circumstances change and affect their tax withholding?

If your employee’s circumstances change, such as they start or stop claiming the tax-free threshold, you need to adjust the amount of tax you withhold from their pay. Your employee must complete a new Tax File Number (TFN Declaration) form to update their details.

Once you get the updated TFN Declaration, use the new information to calculate the correct amount of tax to withhold using the right tax table. Keep records of all TFN Declarations and any changes to your employees’ circumstances.

3. Can I use the same weekly tax table for all my employees?

Not necessarily. The weekly tax table you use depends on your employee’s circumstances, such as their residency status and whether they claim the tax-free threshold. The ATO has different tax tables for different situations, including:

• Residents claiming the tax-free threshold
• Residents not claiming the tax-free threshold
• Foreign residents
• Holidaymakers

Use the right table for each employee based on their circumstances to get the tax withholding right.

4. How often do I pay the withheld amounts to the ATO?

The frequency of your PAYG withholding payments to the ATO depends on the size of your business and the amount of tax you withhold. For example, small withholders of $25,000 or less must make the payments quarterly, while medium withholding businesses of $25,000 to $1 million pay monthly. 

From 1 July 2024, the $450 per month threshold for super guarantee eligibility has been removed. Employers must pay a super guarantee for all eligible employees regardless of how much they earn. Check your BAS or talk to your tax agent to determine your payment frequency. Make sure you pay on time to avoid interest and penalties.

You can view the full weekly tax tables from the ATO here.