What Is Corporate Affairs Commission?

How is tax on commission calculated for PAYG (Australia)?

• I have a job that gives me the opportunity to earn some commission on sales. The commission is a set amount per sale (ie. not a percentage of gp). The PAYG withheld on my commission is confusing me. I believe the payroll officer uses MYOB to calculate the PAYG and I assume it is all calculated automatically. To simplify it lets have a look at some examples (with and without commission): Example 1 Base pay (gross): $2100 PAYG withheld: $500 (higher than required according to the fortnightly tax table) Example 2: Base pay: $2100 Commission: $250 PAYG withheld: $520 Example 3: Base pay: $2100 Commission: $500 PAYG withheld: $642 Example 4: Base pay: $2100 Commission: $1250 PAYG withheld: $996 and the most confusing is when the commission is paid separately for some reason. Example 5: Base pay: $2100 PAYG withheld: $500 Commission: $1000 PAYG withheld: $54 So what I can't understand is why I pay only $54 on the $1k commission when it is paid as a separate item. By comparison, $496 is withheld from $1250 when it is paid along with my salary.

• Answer:

  Some payroll systems are fairly sophisticated when it comes to calculating tax on variable income such as occurs when people are paid irregular amounts of commission. It sounds like the payroll system is using a 'rolling' calculation that looks at how much you've earned so far in the Financial Year; how much tax in total is payable on that and how much has actually been deducted so far to determine how much tax should be deducted in this particular pay period. The effect of doing it that way means that you should finish the year pretty well square with the ATO (but without taking any deductions into account). That would explain the apparent inconsistencies.