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.


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