Bonus and back pay tax calculator (ATO Schedule 5, 2026-27)
Work out the tax withheld from a bonus, commission or back pay in Australia, the way payroll does it under ATO Schedule 5 for payments from 1 July 2026. It covers Method A (bonuses and commissions), Method B(i) (back pay for earlier pay periods this year) and Method B(ii) (back pay for earlier years and lump sums in arrears), including the HELP/study loan component and the 47% limit. It matches all four ATO worked examples to the dollar.
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CalculatorWorked examplesWhich method?FAQ
Worked examples (ATO Schedule 5, from 1 July 2026)
- Example 1, Method A (Jarrod): $1,400 a week, a $900 annual bonus, HELP debt. $900 ÷ 52 = $17. Withholding on $1,417 is $272, less $267 = $5 × 52 = $260. HELP: $12 − $10 = $2 × 52 = $104. That's $364, under the 47% limit of $423. Total this week: $641.
- Example 2, Method B(i) (Robyn): pay rose from $1,600 to $1,700 a week, with $800 back pay for 8 weeks. Each week: $363 − $331 = $32 × 8 = $256. HELP: $55 − $40 = $15 × 8 = $120. Total this week: $794.
- Example 3, Method B(ii) (Laura): $1,800 a fortnight, a $2,480 allowance paid in arrears in pay period 10. $2,480 ÷ 26 = $95. Withholding on $1,895 is $242, less $212 = $30 × 26 = $780. Total: $992.
- Example 4, B(i) and B(ii) (Bradley): monthly pay rose from $6,200 to $7,000, backdated 13 months ($10,400). This year's $1,600 under B(i): $512 + study loan $242. Last year's $8,800 under B(ii): $2,808 + $1,296 = $4,104 (under the $4,136 limit). Total this month: $6,492.
Which method applies?
- Bonus or commission for one pay period: add it to that period's pay and use the normal tax table.
- Bonus or commission for longer (or an undefined period): Method A spreads it over the year's pay periods (52, 26 or 12), or over the number of periods it relates to.
- Back pay for earlier periods this financial year: Method B(i) re-runs each earlier period with the extra pay and withholds the difference.
- Back pay for earlier financial years, or lump sums in arrears: Method B(ii) averages the year's earnings and spreads the payment over the year.
- Methods A and B(ii) can't withhold more than 47% of the extra payment.
FAQ
How much tax is taken out of a bonus in Australia?
For a bonus that covers more than one pay period, payroll uses ATO Schedule 5 Method A. The bonus is divided by the number of pay periods in the year (52, 26 or 12), added to one period’s normal pay, and the extra withholding on that amount is multiplied back up. It can’t be more than 47% of the bonus. Weekly pay of $1,400 with a $900 bonus has $260 withheld from the bonus (plus $104 for HELP).
Why is so much tax taken from my bonus?
If the bonus is paid with your normal pay and treated as one period’s earnings, the withholding tables assume you earn that much every period. Schedule 5 Method A avoids this by spreading the bonus over the year. Either way, any over-withholding comes back when you lodge your tax return.
How is back pay taxed?
Back pay for earlier pay periods in the same financial year uses Method B(i): each earlier period is recalculated with the extra pay and the difference is withheld. Back pay for an earlier financial year uses Method B(ii), which averages it over the year. Method B(ii) is limited to 47% of the payment.
Does HELP debt affect tax on a bonus?
Yes. Payroll runs the same method again for the study and training support loan component and adds it to the PAYG amount. For Method A and B(ii), the combined amount is still limited to 47% of the payment.
Is the tax withheld from a bonus my final tax?
No. Withholding is a prepayment. The bonus is part of your taxable income for the year and is taxed at your marginal rate when you lodge, with the amount withheld credited against your tax bill.
Sources (checked 17 Oct 2026): ATO Schedule 5 – Tax table for back payments, commissions, bonuses and similar payments (published 17 June 2026); ATO Withholding amounts examples; ATO Working out the withholding amount. Normal pay withholding uses Schedule 1 (NAT 1004) and Schedule 8 for payments from 1 July 2026.
General information, not tax advice. This shows the amount withheld by payroll. Your actual tax on a bonus or back pay is worked out in your tax return. Back pay that relates to an earlier income year may qualify for the lump sum in arrears tax offset when you lodge. That isn't modelled here.