Merry Christmas – Staff Bonuses

Merry Christmas – Staff Bonuses

If you are considering paying your staff a bonus before Christmas keep in mind tax on the bonus will need to be calculated manually. If you allow your software to calculate the tax it won’t be able to differentiate between a bonus and weekly wage, hence the need to calculate manually.

Below is a worked example:

Employee  usual earnings are $1230 per week, tax withheld is $263.

 (Assumptions – TFN yes, Resident yes, Tax free threshold Yes, Help No, SFSS No, $0 Tax offsets, paying full medicare with no spouse, no children)

This is calculated using the ATO Tax Withheld for Individuals.

https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=TWC&anchor=TWC/questions#TWC/questions

You decide to pay your employee $2000 bonus. To calculate the tax:

Divided $2000 by 52 weeks as wages are paid weekly = $38.46.

Add $38.46 to weekly earnings and recalculate the Tax.

New weekly wage is $1268 ($1230+$38) and tax using the ATO Tax Withheld Calculator is $276.

Take the increased tax of $276 and withdraw the normal weekly tax of $263 = $13.

The tax to withhold from $2000 bonus is ($13x52weeks) or $676.

The net payment to your employee is $1324.

Please note a Christmas bonus falls under the definition of Ordinary Times Earnings so you will need to pay 9.5% Superannuation Guarantee on any bonus you pay. Please factor this in to your calculations.

If you have any questions please give our office a call on 07 5437 9900.

Merry Christmas & Happy New Year

From the Poole Group Team

Related Articles

The end of the financial year is an opportunity to optimise your financial strategy, take advantage of tax deductions, and set yourself up for the new financial year.Whether you're looking to...

Read more

With FY2024 behind us and FY2025 well underway, finalising your financial accounts and tax returns might feel like a routine task. However, updating your three-way forecast alongside your accountant-prepared financials is more than just compliance—it’s a strategic move that can impact your borrowing power, interest rates, and overall financial stability. Why Lenders Rely on Three-Way Forecasts…

Read more