Tax Returns

Tax Withheld for Individuals Calculator

Tax is an annual certainty, but it’s not the same every year. In fact, some significant changes have been made for the 2020–21 financial year. New tax withholding schedules are in place, which means it’s time for employers to update their payroll processes to apply tax cuts.

Here, we explain what you need to know about the tax changes, and how to use a ‘tax withheld for individuals’ calculator to figure out the right amounts for your employees.

Why do I need to withhold tax?

As a business owner who employs staff, it is your duty to withhold a certain amount of tax from their wages under Australian tax law. By failing to carry out your tax obligations, you could face severe penalties from the Australian Taxation Office (ATO).

But what if you’re just a small business owner without a finance team to rely on? It’s up to you to work out how much tax to withhold according to each employee’s wage. To make your life easier, the ATO has provided two easy-to-use calculators..

Which calculator should I use?

The ATO provides two different calculators for tax withholding purposes. The first and most common is the tax withheld for individuals calculator. This is the one most Australian business owners will use – it’s the standard for regular employees and other types of workers (e.g. working holidaymakers).

The second is for sub-contractors who are subject to voluntary agreements, called the voluntary agreement calculator.

For the purpose of this blog, we will assume you run a standard business and will use the individuals calculator.

What information do I need from staff to use the calculator?

Before being able to use the tax withholding calculator properly, you will need three declarations from your employees. Typically these will have been collected when they first signed a contract to work for your company:


What will the calculator do?

Once you have all that information and know the exact income of each person you employ, you can start using the calculator. There is a fair amount of information to enter, however the calculator itself is very simple to use. According to the ATO, the calculator will take into account:

  • Income tax rate
  • Medicare levy
  • Study and training support loan contributions
  • Worker status:
    • Resident
    • Non-resident
    • Working holidaymaker
  • Registration of employers of working holidaymakers
  • Tax-free threshold
  • Tax offset entitlements

If you’re still unsure how to use the calculator for tax withholding, there is a helpful how-to guide to walk you through the process.

Lodging tax return Burnie

Sure, you can use online calculators to figure out how much tax should be withheld, but if you’re a business owner who has to manage tax obligations for multiple employees it can become a mind-numbing, time-consuming process. It’d be so much easier to have a local tax expert take care of the numbers for you. That’s why lodging tax return Burnie is the smart move.

At Gillet & Associates, we do all the tax, BAS, payroll and bookkeeping work so you don’t have to. We specialise in small business taxation, and are renowned for helping our clients maximise their tax efficiency. Why do all the heavy tax lifting yourself when we can do it for you?

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.