Schedule 5 Calculator — Tax Withheld From Your Bonus
Enter your regular pay and the additional payment to see the Method B(ii) withholding your payroll should apply under the 2026-27 rates.
Withholding on your bonus
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See your bonus after tax alongside annual income, Medicare, and super effects.
Bonus tax calculator Back pay calculatorWhat Is PAYG Schedule 5?
Schedule 5 (NAT 3348) is the ATO withholding schedule for "back payments, commissions, bonuses and similar payments" — any lump sum paid on top of ordinary wages. Employers cannot simply add a $5,000 bonus to one fortnight's pay and use the fortnightly tax table: doing so would annualise the bonus as if you earned it every fortnight and withhold far too much. Schedule 5 exists to withhold at a rate that reflects the payment's effect on your annual income.
The schedule offers employers two calculation methods. Both arrive at broadly similar outcomes, but Method B(ii) is the default in most payroll software because it works for any additional payment, including back pay covering prior financial years.
Method A vs Method B — How Employers Calculate the Withholding
Method A — apportion across the current year's remaining pays
Method A divides the additional payment by the number of pay periods in the financial year, adds that slice to the current pay's earnings, finds the withholding difference, and multiplies it by the number of pay periods. It is designed for payments that relate to the current pay period or year, such as a quarterly commission.
Method B(ii) — apportion across all pays in the year
Method B(ii) spreads the payment evenly across all pay periods in the year (52 weekly, 26 fortnightly, or 12 monthly). The steps:
- Divide the additional payment by the number of pay periods and disregard the cents.
- Add that amount to the gross earnings for the current period.
- Work out the withholding on the combined amount, and on the normal earnings alone, using the regular tax table.
- The difference, multiplied by the number of pay periods, is withheld from the additional payment.
Worked example (2026-27): an employee earns $2,000 a fortnight and receives a $5,000 annual bonus. The apportioned slice is $192 per fortnight, the withholding difference is $64 per pay, and total withholding on the bonus is $1,664 — an effective rate of about 33.3%, close to the employee's marginal rate rather than the top rate. Verify your own numbers with our bonus tax calculator.
Which Payments Use the Schedule 5 Tax Table?
- Bonuses and incentive payments — annual performance bonuses, sign-on bonuses, KPI payments. See the bonus tax guide for how these interact with super.
- Commissions — sales commissions paid as lump sums rather than in every pay.
- Back payments and arrears — underpaid wages, backdated pay rises, and award reclassifications. Use the back pay calculator to estimate the tax on arrears.
- Repeated lump sums — quarterly or irregular allowances not part of ordinary pay.
Payments that do not use Schedule 5 include unused leave on termination (Schedule 7) and employment termination payments such as redundancy (Schedule 11) — our final pay calculator and redundancy pay calculator cover those cases.
Why Does Your Bonus Look So Heavily Taxed?
A bonus is not taxed at a special punitive rate — it is withheld at your marginal rate, which is higher than the average rate applied to your normal pay. Because the tax-free threshold and lower brackets are already consumed by your salary, every bonus dollar sits in your top bracket (30%, 37%, or 45% plus Medicare levy). If payroll skipped Schedule 5 and taxed the lump sum through the regular table, withholding would be even higher, and the excess would only come back at tax return time.
Frequently Asked Questions
How this calculator works▼
Schedule 5 calculations on this page implement ATO Method B(ii) using FY2026-27 resident rates (15% on $18,201–$45,000 from 1 July 2026), assuming the tax-free threshold is claimed and pay is uniform across the year. Printed ATO tables round coefficients slightly differently, so payroll figures may vary by small amounts. Always verify payroll-critical amounts against NAT 3348.
Sources & References
- 1Schedule 5 — Tax table for back payments, commissions, bonuses and similar payments (NAT 3348)— Australian Taxation Office
- 2Tax tables overview— Australian Taxation Office
Last verified: 14 March 2026. Our content is based on the latest information from official Australian government sources.
James Harrington
Verified AuthorSenior Tax & Payroll Analyst
CPA, Registered Tax Agent (25787011)
James is a CPA-qualified tax professional with over 14 years of experience in Australian taxation and payroll systems. He spent six years at the Australian Taxation Office working on PAYG withholding and individual tax return processing before moving into financial publishing. He now leads the tax content at Pay Calculator Australia, translating complex ATO legislation into clear, actionable guidance.
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