Most years, employees paid weekly get 52 pays and employees paid fortnightly get 26. Every so often, the calendar doesn’t cooperate, and you end up running 53 weekly pays or 27 fortnightly pays inside the one financial year.
When that happens, the PAYG you withhold across the year won’t cover what your employees actually owe. Nothing has gone wrong in your payroll, and your software hasn’t made a mistake. The tax tables just assume a year that your pay calendar didn’t deliver.
Here’s what causes it, why the shortfall happens, and what we’d recommend telling your employees before the ATO does it for you.
What causes the extra pay period
A year runs 365 days, or 366 in a leap year, and 52 weeks only accounts for 364. That leftover day (or two) shifts your pay dates forward slightly every year until, eventually, an extra pay date lands inside the financial year.
Whether it lands on you depends entirely on your own pay dates. Two businesses can run the same weekly cycle and only one of them ends up with 53 pays, purely because of which day they pay on, so there’s no universal “27 fortnight year” that hits everyone at once. This is why it’s worth checking your own calendar rather than waiting for someone to announce it.
How to check if your financial year has 53 pays
The only way to know is to count your own pay dates.
Start with the date of your first pay for the financial year, meaning the first payment dated 1 July or later. Add 7 days at a time for weekly, or 14 for fortnightly, and count how many payment dates land on or before 30 June. If you get 53 or 27, this article applies to you.
The date that matters is the date the money lands, not the date the pay period covers. A pay period ending 28 June that’s paid on 2 July belongs to the new financial year, and this is where we see people miscount – they work off period end dates, get 52, and move on.
Do this before your first pay run of the year. The reason why is further down, but the short version is that this problem gets more expensive to solve the longer you leave it.
Why PAYG falls short
The ATO’s weekly tax table is built on 52 pays and the fortnightly table is built on 26. Each pay’s withholding is calculated as though it’s one of those pays.
Income tax is progressive, so the tax-free threshold and the lower marginal rates get spread evenly across the assumed pays. When a 53rd pay turns up, it’s taxed as though the employee still has a slice of tax-free threshold left to allocate against it, but they don’t — it’s already been used up across the previous 52. Not enough is withheld from that extra pay, and the employee ends the year owing tax that PAYG didn’t collect.
Why it isn’t extra tax
The employee isn’t being taxed more. They’re earning more.
Someone on $1,000 a week receives $52,000 in a normal year. In a 53-pay year, they receive $53,000. They owe more tax because they were paid more money, and PAYG simply didn’t collect enough of it along the way.
Employees hear those two things very differently: “you’ll owe extra tax this year” versus “you’re getting an extra pay this year, and the tax on it won’t be collected automatically.” Same fact, and the second one doesn’t generate a queue outside the payroll office.
ATO additional withholding amounts for 53 and 27 pay years
If an employee is worried about the shortfall, they can ask you to withhold extra from each pay, using the amounts the ATO publishes against their earnings.
Where there are 53 weekly pays
Weekly earnings | Additional withholding |
|---|---|
$875 to $2,574 | $3 |
$2,575 to $3,649 | $7 |
$3,650 and over | $12 |
Source: ATO weekly tax table
Where there are 27 fortnightly pays
Fortnightly earnings | Additional withholding |
|---|---|
$1,700 to $5,199 | $12 |
$5,200 to $7,249 | $27 |
$7,250 and over | $48 |
Source: ATO fortnightly tax table
These figures move when the tax tables move, which is most financial years. Make sure to sheck the current tables in July rather than working from a saved copy.
Two things are worth knowing before you use them. The amounts are voluntary and the request has to come from the employee, so you can’t apply them across your workforce because it seems like the better option. Withholding extra tax from someone who didn’t ask for it is a problem you’ve created, not solved. And employees earning below the bottom threshold aren’t listed at all, because at that level there’s little or no shortfall to correct.
How the additional withholding changes if you start late
The published amounts assume you start withholding from the first pay of the year and keep going for all 53 or 27 pays. Start late and the same total has to be recovered over fewer pays, so the per-pay figure climbs.
Asking in October: An employee earns $2,000 a fortnight, so the table says $12 extra per pay. Across 27 pays that’s $324 for the year. If they only ask in October and there are 18 pays left, it’s $324 ÷ 18 = $18 a pay.
Asking in April: Same employee, same $324, but only 5 pays left: $324 ÷ 5 = $65 a pay. That’s the same employee solving the same problem for three and a half times the fortnightly hit, and in our experience it’s the point where people decide they’d rather take their chances at tax time.
The same maths applies weekly too. An employee on $3,000 sits in the $7 band, so over 53 pays that’s $371. Starting from week 20 with 34 pays left, $371 ÷ 34 gives $11 a pay.
This is the whole argument for telling people in July. The fix is cheap in July, awkward by October, and effectively gone by April.
What to tell employees, and when
Tell them at the start of the financial year, in writing, before the first pay run. What you’re doing is giving people a choice while the choice is still cheap, and everything else follows from that.
We’d cover the fact first: this financial year has 53 weekly pays, or 27 fortnightly pays, instead of the usual 52 or 26. Then what it means, which is more gross pay this year and PAYG that won’t quite cover the tax on it. Then the reassurance that it isn’t extra tax. They’re being paid more, and the tax follows the income. Then their options, which are to do nothing and settle it at tax time, or ask for extra withholding now. And finally how to ask, which means naming a person, a form or an email address, and a date by which asking is cheapest.
Keep a record of what each employee decides. A one-line written response, filed, is what saves you the conversation in October where someone is certain nobody told them.
When the additional withholding table isn’t enough
Some employees need more than the table.
Anyone with a study or training support loan has a slightly bigger problem, because the extra pay lifts their income for the year and their compulsory repayment is calculated on that higher figure. The additional withholding table doesn’t account for it. Same for anyone with a second job, or investment income, or who sits near a threshold where a thousand extra dollars changes their tax position more than the table assumes.
Our advice for these people is the ATO’s tax withheld calculator or their accountant, not the table. The table is a blunt instrument built for the standard case, and it’s honest about that.
Mid-year starters are the other ones worth thinking through. Someone who joins in November hasn’t been paid 53 times by you, so the shortfall logic doesn’t apply to them the way it applies to your existing staff. Sending them the same all-staff email creates confusion you’ll have to unwind. Worth filtering the list before you send.
Where employers get caught out
The most common assumption we see is that the software handles it. It doesn’t. Payroll systems usually apply the standard tax table to each pay and have no view on how many pays your calendar holds, so the extra withholding is a manual adjustment on the employee record, made by a person who noticed.
Close behind is assuming it applies to everyone. Monthly payrolls always have 12 pays and are never affected, and if you run weekly and fortnightly cycles side by side, one may be affected while the other isn’t. Sending an all-staff email about 27 pays to a workforce where half of them get 26 is a bad start.
Then there’s leaving it until the shortfall is real, which is really just the timing problem arriving on schedule. And treating silence as a decision — an employee who didn’t respond to the July email hasn’t chosen to wear the shortfall, they’ve chosen not to read an email, and those feel very different in October.
The last one is working from stale figures. The numbers in this article are current at the time of writing and they’ll move when the ATO next updates the tables, which is why the source links are there. Check them each July.
Payroll software won’t flag the extra pay period
Your payroll software will likely process 53 pays without blinking. It will apply the correct tax table to every one of them and produce a technically correct result that leaves your employees short at tax time, and it’s unlikely to flag that anything unusual happened.
Noticing the extra pay period, telling your people, and giving them a real choice while that choice is still cheap — that sits with you as the employer, the same way the withholding obligation itself does. Software executes what it’s told. Employers are the ones who answer for it.
That gap between “the system did what it was told” and “someone was watching the calendar” is where most payroll surprises live.
Not sure whether your pay calendar has an extra period this year? At Alltech, we manage payroll for 150+ businesses across Australia, and checking the pay calendar before the first run of the financial year is part of the job. Get in touch.
FAQs
What happens if an employee gets a tax bill?
Nothing, from a compliance standpoint — you withheld what the tax tables told you to, and there’s no penalty for a shortfall caused by an extra pay period. The employee settles the difference through their return, or arranges a payment plan with the ATO if they can’t pay it in a lump.
Can we withhold the shortfall as one lump before 30 June instead of spreading it?
Not using the additional withholding table, which is built as a per-pay amount, but an employee can ask you to withhold a specific extra amount from a specific pay under the same voluntary arrangement. It needs to be in writing from them, and it’s worth confirming the figure rather than guessing, since a lump estimate is easy to overshoot. This usually comes up when someone realises late and doesn’t want $65 a fortnight for the rest of the year — worth them running it through the ATO’s tax withheld calculator before they commit.
Does the extra pay period affect super, leave accruals or anything else?
Super, but not as a problem: you pay SG on qualifying earnings for each pay run, so a 53rd pay attracts super like any other and the employee simply ends the year with more of it. The one thing worth watching is the maximum contribution base, now an annual figure rather than quarterly, so a high earner who was going to hit the cap will hit it slightly sooner across 53 pays. Leave accruals aren’t affected at all, because they accrue against hours worked or service rather than the number of times you run a pay.
What about someone who leaves partway through the year?
They don’t have the problem, because the shortfall depends on receiving 53 pays from you, and anyone who leaves before the 53rd hasn’t been overpaid relative to the tables. Where it matters is the ones who asked for extra withholding and then resigned — they’ve had additional tax taken out for a shortfall that never eventuated, and they’ll get it back through their return.
Should we tell every employee, or only the ones affected?
Only the ones affected, which means filtering by pay cycle before you send anything. If you run weekly and fortnightly side by side, one may have an extra pay period while the other doesn’t, and monthly employees are never affected because monthly is always 12 pays.
Disclaimer: Withholding figures current at the time of writing and sourced from the ATO’s weekly and fortnightly tax tables. Rates and thresholds change each financial year. Always check the ATO before processing.