Commission Tax Calculator
See what your employer withholds from a commission under ATO Schedule 5, and how much of it you keep.
Because the commission covers a defined period under 12 months, Schedule 5 lets your employer divide by 13 rather than 52. Dividing by 52 instead gives $1,872. Method B(ii) on the same figures gives $1,872. Both are acceptable to the ATO.
ATO Schedule 5 (NAT 3348) on scale 2 at 2026-27 rates. This is what payroll withholds, not your final liability. The difference settles when you lodge.
How is commission taxed in Australia?
A commission is ordinary income. There is no separate commission tax rate and no penalty rate. What makes it look different on a payslip is the withholding method: the ATO's Schedule 5 (NAT 3348) averages the payment across pay periods so it is not taxed as if you earned that much every week.
Step by step
- Work out the tax on your normal pay. Take this period's gross earnings without the commission and look up the tax. On $2,000 a week that is $459.
- Spread the commission across pay periods. Divide it by 52, 26 or 12 depending on your pay cycle. Where the commission covers a defined period under 12 months, your employer may divide by that instead. $6,000 over 13 weeks is $461 a week.
- Look up the tax on the raised amount. Add the averaged slice to your normal pay and look the total up again. Tax on $2,461 is $606.
- Multiply the difference back out. Subtract step 1 from step 3, then multiply by the number of periods you divided by. That gives $1,911 withheld from the commission.
- Apply the 47% cap. Withholding on the commission can never exceed 47% of it. Compare the step 4 figure against $2,820 and use the lesser.
When does Schedule 5 not apply?
When the commission relates to work performed in a single pay period. The ATO is explicit: do not use this schedule for payments for a single pay period. The commission is added to that period's other earnings and the regular weekly tax table does the work.
That distinction is worth money. On $2,000 a week, a $6,000 commission earned across 13 weeks has $1,911 withheld under Schedule 5. The same $6,000 treated as a single-period payment has $2,646 withheld, $735 more, because none of it is averaged.
Both figures are correct for their circumstances, and neither changes what you finally owe. Your real liability is worked out on the year's total income, so an over-withheld commission comes back as a refund.
Why did my employer divide by 13 instead of 52?
Schedule 5 allows it. Where a commission covers a defined period of less than 12 months, the employer may divide by the number of pay periods the payment relates to rather than the full year. Both are acceptable.
Dividing by the shorter period withholds slightly more. On $2,000 a week, a $6,000 commission covering 13 weeks has $1,911 withheld when divided by 13, against $1,872 when divided by 52. Method B(ii) on the same figures gives $1,872.
Withholding on the commission itself can never exceed 47% of it. On the figures above the cap would be $2,820, far above the $1,911 actually withheld. The cap only binds on large payments against small regular earnings, and the ATO warns it can then leave you short at assessment.
Does commission push me into a higher tax bracket?
Only the part of it that crosses a threshold, and only at tax time. Withholding is an estimate taken each payday; your real tax is worked out once, on the year's total income, using the 2026-27 tax brackets.
On $2,000 a week, which is $104,000 a year, a $6,000 commission lifts income to $110,000. Every one of those extra dollars sits inside the 30% band that runs from $45,000 to $135,000, so the commission adds $1,920 of tax and Medicare levy for the year. Schedule 5 withheld $1,911 from it. If withholding ran ahead of that, the excess returns as a refund; if it fell short, the gap shows up on your assessment.
The bracket only bites when the commission straddles a boundary. On a salary just under $135,000, the dollars above it are taxed at 37% and the ones below at 30%. No part of your ordinary salary is ever retaxed at the higher rate.
Do I get super on commission?
Yes. The ATO lists commission payments as ordinary time earnings, and since Payday Super started on 1 July 2026 they are also qualifying earnings, the base the super guarantee is now paid on. At the 12% rate a $6,000 commission carries $720 of super, paid by your employer on top of the commission rather than out of it.
One change under the new rules is worth knowing. Commission earned solely for work done entirely outside ordinary hours was never ordinary time earnings, but the ATO's qualifying earnings table now includes it. And the timing has tightened: the contribution must reach your fund within 7 business days after the day the commission is paid, not at the end of the quarter.
Check the figure on the super guarantee calculator, and see how the first month of the new regime went in our Payday Super update.
What if I am paid commission as a contractor?
Schedule 5 is an employee schedule. A commission-only sales agent who invoices under an ABN has no PAYG withholding taken at all, so the tax arrives as one bill when the return is assessed, and after that through quarterly PAYG instalments.
Two exceptions pull a contractor back into withholding. If you do not quote an ABN, the payer withholds the top rate of tax from any payment over $75 excluding GST. And a contractor can sign a voluntary agreement asking the payer to withhold, which makes commission income behave more like a wage.
To work out the year's tax on commission earned under an ABN, run it through the contractor pay calculator, then estimate the quarterly figure on the PAYG instalment calculator.
How much tax on common commission amounts?
Resident rates for 2026-27, tax-free threshold claimed, no study loan, Method A dividing by the periods the commission covers.
| Weekly pay | Commission | Periods covered | Withheld | You keep | If treated as one period |
|---|---|---|---|---|---|
| $1,500 | $2,000 | 4 | $640 | $1,360 | $703 |
| $2,000 | $6,000 | 13 | $1,911 | $4,089 | $2,646 |
| $2,500 | $15,000 | 26 | $5,668 | $9,332 | $6,951 |
| $3,500 | $30,000 | 52 | $13,416 | $16,584 | $14,088 |
Commission, bonus or back pay: which is it?
All three can run through Schedule 5, and the label decides which method your employer reaches for.
- Commission rewards performance or service, often as a percentage of a sale. It is the payment this page calculates.
- A bonus also rewards performance or service but need not relate to any particular period. Work out that figure on the bonus tax calculator.
- Back pay is money that should have been paid earlier. A commission paid late for a past period is back pay, and the back pay tax calculator runs Method B(i) or B(ii) on it.
Frequently asked questions
How much tax is taken out of commission in Australia?
Is commission taxed higher than salary?
Does Schedule 5 apply to every commission?
Is commission taxed at 47%?
Why did my employer divide by 13 instead of 52?
Does commission push me into a higher tax bracket?
Do I get super on my commission?
Does commission count towards my HECS-HELP repayment?
Sources
- ATO: Schedule 5: Working out the withholding amount (NAT 3348, QC107123, published 17 June 2026). Method A, the short-period divisor and the 47% limit.
- ATO: Schedule 5: About this schedule. What counts as a commission, and the single pay period exclusion.
- ATO: Schedule 1: Statement of formulas (NAT 1004). The tax table every step looks up.
- ATO: What payments are qualifying earnings. Commission payments as ordinary time earnings and qualifying earnings under Payday Super.
- ATO: Payment deadlines for Payday Super (QC105846). The 7 business day deadline.