PAYG Withholding Calculator
Withholding for staff, plus the 49% no-ABN rate practices hit with locums.
Payment details
Flat 49% applies — common with locums.
Removes the Medicare levy surcharge.
Withholding
Two very different jobs sit under one name. Withholding for your staff is an estimate of their annual tax. The 49% no-ABN rate is a compliance penalty rate that has nothing to do with what the person actually owes — and it is the one that catches practices out with locums.
The 49% rate, and why it is not a tax rate
When a payee does not quote an ABN and no voluntary agreement is in place, you must withhold 49% — 47% tax plus the 2% Medicare levy. It is deliberately punitive and it is not an estimate of the person's tax position.
The payee gets the difference back by lodging a return. But it lands as a large immediate reduction in what they are paid, which is why locums are often surprised and practices are often caught short.
The fix is administrative, not financial: get the ABN on file before the first payment. If a voluntary agreement is in place, use the agreed rate instead.
What staff withholding actually comprises
Withholding for employees is income tax calculated on annualised earnings, plus the Medicare levy, plus the Medicare levy surcharge where the employee has no private hospital cover and earns above the threshold, plus any HELP or student debt repayment.
The Medicare levy is shaded for lower incomes rather than applying a flat 2% from the first dollar, so the effective rate rises gradually as income moves through the shading range.
HELP repayment is calculated on repayment income, which is broader than gross pay — it adds back things like reportable fringe benefits. A doctor with a large HELP balance and a packaged arrangement can be caught by this.
Surcharge thresholds are per household
The Medicare levy surcharge threshold is roughly double for a family compared with a single person, and it increases further for each dependent child. An employee just over the single threshold may owe nothing at all once their household is taken into account.
This is the most common source of over-withholding for practice staff, and it is worth checking before you accept a default from payroll software.
What this calculator does not do
It does not replace payroll software. It excludes tax offsets, assumes a standard full-year earnings pattern, and does not handle mid-year changes, termination payments or lump sums.
Use it to sanity-check a figure, to understand why a number looks the way it does, and to work out the impact of a change before it hits a pay run. For actual withholding, rely on your payroll system and the ATO tables.
Frequently asked questions
What is the 49% no-ABN withholding rate, and when does it apply?
If you pay a contractor who has not quoted an ABN and there is no voluntary agreement in place, you must withhold 49% of the payment (47% tax plus the 2% Medicare levy). It is a compliance rate, not an estimate of what the person owes — they recover the difference by lodging a return.
Why does my employee's withholding not match the ATO tax tables exactly?
This calculator uses the annualised method on a standard full-year earnings pattern. The ATO's withholding schedules also account for tax offsets, HELP variations, and per-period rounding. Use this figure for planning and to sense-check payroll software, not as a substitute for it.
Does the Medicare levy surcharge apply to my staff automatically?
No. The surcharge only applies where the employee has no appropriate private hospital cover and their income is above the threshold for their household. Extras-only cover does not exempt them, and the family threshold is much higher than the single threshold.
Related calculators
This calculator provides general information only and is not tax advice. It does not account for your individual circumstances. Confirm figures against the relevant legislation or with a registered tax agent before relying on them for a lodgement.
Reviewed by eHealth Systems Pty Ltd