The recent federal budget has brought forward previously announced changes to personal income tax rates, starting in the financial year we are currently in, being 2020-2021.
New PAYG withholding tables have been released by the ATO to assist in calculating the tax to withhold from your employees pay. The tables can be found on the ATO website, and are effective from 13 October.
Payroll systems will need to be updated for this change – most software providers will be abreast of these changes and may have already communicated their roll out plan with you.
If you rely on a system that doesn’t utilise payroll software, or you have customised settings for some of your employees, you can use the tables to assist in calculation. Employers who are unable to immediately implement the changes have until 26 November 2020 to ensure their system is updated and the correct withholding is being applied to their employees pay.
There will be no back adjustment required by employers, and withholding under the old scales will be adjusted in the employees tax return when it is lodged.
For further information on the threshold and offset changes, please see the ATO website.
If you need further information or advice specific to your circumstances, please get in touch with the team at Cutcher & Neale.
