Why your public holiday pay looks over-taxed: the PAYG maths on a Christmas fortnight, and what comes back

Work the Christmas fortnight at a Sydney pub and your pay roughly doubles, from $1,678.96 to $3,547.48. The tax taken out goes from $180 to $772, more than four times as much. Nobody made a mistake, and there is no special public holiday tax rate.

What's happening is simpler and more annoying. The ATO's withholding tables treat every pay as if you'll earn it every fortnight for a year, so a fortnight packed with $67.70-an-hour shifts gets withheld like a $92,000 salary. Here's the maths on both fortnights, and what actually comes back when you lodge.

Short version: PAYG withholding is an estimate, worked out one pay at a time. A big fortnight is withheld at the rate for a much bigger income, then your real tax is worked out on your real annual income when you lodge. Some of the extra comes back, usually less than people expect. This is general information, not financial or tax advice: use the ATO's tax withheld calculator for your own numbers.

How your employer works out the tax on one pay

Your employer doesn't know what you'll earn this financial year. So the ATO's formulas take your fortnightly pay, halve it to a weekly figure, and apply a set of rates that assume 26 identical fortnights a year. All 12 ATO tax tables were updated for payments from 1 July 2026, when the 16% bracket dropped to 15%.

That assumption works fine when every fortnight looks the same. It falls apart in hospitality, where a quiet February and a Christmas full of public holidays can sit in the same year. The formula only ever sees the pay in front of it.

An ordinary fortnight against the Christmas fortnight

Take a casual Level 2 food and beverage attendant in NSW on the Hospitality Award, paid fortnightly, who has claimed the tax-free threshold. All shifts are day shifts finishing by 7pm, so no evening loading, and each week stays at or under 38 hours, so no overtime. The Christmas fortnight runs Monday 21 December 2026 to Sunday 3 January 2027 and takes in three public holidays: Christmas Day, Boxing Day and the extra NSW holiday on Monday 28 December (our Christmas public holiday pay breakdown has the full calendar). New Year's Day is a day off.

The ordinary fortnight lands in the part of the table built around the 15% bracket. The Christmas fortnight lands in the part built for someone earning over $45,000, where every extra dollar is taxed at 30% plus the 2% Medicare levy. On the weekly figure, that's 32 cents of every extra dollar withheld, against about 18 cents on an ordinary fortnight.

The tax table doesn't know it's Christmas. It assumes you'll work this fortnight 26 times a year.

What comes back at tax time, and why it's less than you think

At the end of the financial year the ATO ignores how each fortnight was withheld. It works out the tax on your actual taxable income, takes off the low income tax offset (up to $700), adds the 2% Medicare levy, and compares that with everything withheld across the year. Here are two years for the same worker, both including the Christmas fortnight, with no deductions, no other income and no study loan.

Look closely at the first column. Of that $502, only about $121 is down to Christmas. The big fortnight added $1,868.52 in pay and $592 in withholding, but it also added about $471 of real tax, because it pushed the top of this worker's year over $45,000 and into the 30% bracket. The other $381 comes from the tables slightly over-withholding at this income all year.

The second column is where real money comes back. The gaps in your year (a month travelling, uni exams, a slow winter) are what the tables couldn't see coming, and they're why a casual with an uneven year so often gets a refund. If you have a HELP debt, a second job or income the ATO doesn't know about yet, the picture shifts, so don't spend the refund in December.

When the tax really is higher, or stays where it is

A second job without the tax-free threshold

If this is your second job and you've answered no to the tax-free threshold, your employer uses a different scale that taxes from the first dollar. The same Christmas fortnight then has $992 withheld, not $772. That's usually correct, because your first job has already used up the $18,200, and our guide to working two casual jobs shows how the two add up at tax time.

Working holiday makers on 417 and 462 visas

Backpacker tax doesn't scale with the size of the pay. A registered employer withholds a flat 15% on each dollar up to $45,000 in a year, so the Christmas fortnight has about $532 withheld. There's no tax-free threshold for working holiday makers, so a big fortnight isn't over-taxed and no refund is waiting for it. The backpacker tax breakdown covers the rest.

Paid by the shift on the daily and casual table

Some venues pay casual shifts one day at a time using the ATO's daily and casual workers table, which assumes you work five days a week at that day's pay. An eight-hour weekday shift of $270.80 has $50 withheld. An eight-hour public holiday shift of $541.60 has $138 withheld, a quarter of the shift, because the formula reads it as a week of $2,705.

What to do after a big fortnight

1. Check the gross first. Make sure each public holiday hour is paid at the public holiday rate before you worry about the tax line. Our guide to checking your hospitality payslip walks through each line.
2. Make sure you claim the tax-free threshold from one employer only. Claiming it twice is the usual cause of a tax bill, not a refund.
3. Run the fortnight through the ATO's tax withheld calculator. If your payslip matches it, the withholding is right for that pay.
4. Don't ask your employer to withhold less. If your year turns out bigger than you planned, the extra withholding is what saves you from a bill.
5. Lodge after 30 June. The refund only appears when the ATO compares a full year of income against a full year of withholding.

Picking up the shifts worth taxing

The withholding sorts itself out at tax time. Getting offered the $67.70 shifts in the first place is the harder part, because most casuals only see one venue's roster. Shiftly is free workforce management for venues with an on-demand staffing network built in, so the roster fills itself. Workers on the network, available along the east coast of Australia, get offered nearby shifts and see the pay before they accept.

One thing to know: on a network shift the venue engages you as an independent contractor, so no PAYG is withheld from that pay, and Shiftly charges workers an 8% service fee. Setting tax aside on those shifts is on you, and the maths above shows roughly how much. Find shifts on Shiftly.

Frequently asked questions

Do you get PAYG withholding back?

Sometimes. PAYG withholding is a prepayment towards your tax for the year, not the tax itself. When you lodge, the ATO works out what you actually owe on your full year's income and refunds anything withheld above that. If too little was withheld, usually because of a second job or the tax-free threshold claimed twice, you pay the difference instead.

Why has my PAYG doubled this pay?

Because your pay went up and the withholding formula treats every pay as if it repeats all year. A fortnight that doubles your pay can lift it into the part of the table built for the 30% bracket, so the tax withheld can more than double. In our example, pay rose 2.1 times and withholding rose 4.3 times.

Is overtime or public holiday pay taxed at a higher rate?

No. There's no separate tax rate for overtime, penalty rates or public holiday pay; it's all ordinary income. It only looks that way because it lifts the size of one pay, and the withholding on that pay is worked out as if you earned it all year.

Why was I taxed so much this week when I usually get a refund?

A big week or fortnight is withheld at a higher rate on its own, and that's normal. If the rest of your year is ordinary, or you take time off, the extra usually comes back when you lodge. If you work two jobs, carry a HELP debt or earn over $45,000, more of it is real tax and less comes back.