Employers: Are you using the right tax tables? Have you updated your payroll software or processes to reflect the updated tax tables?
Changes were made to the personal income tax thresholds announced by the Government during the Federal Budget and apply to payments made on and from 13 October 2020.
What you need to know
- Employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employee’s take-home pay.
- As the change was made partway through the income tax year, employers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so.
- Any withholding based on the old scales to employees will be taken into account when they lodge their 2020-21 income tax return.
ATO tax withheld calculator
A link to the ATO tax withheld calculator is attached below which has been updated to reflect the changes discussed above:
If you are processing your payroll through an online software program, the tax tables should have been updated automatically for you, however, it is important to check and ensure any necessary adjustments subsequent to 13 October 2020 have been made.
Australian small to medium enterprises (SMEs) face many challenges navigating the implications of our complex tax system throughout their business lifecycle.
Whether your SME is a start-up, a growing or established family or a privately owned business, our Vincents tax advisory team can help you stay a step ahead with relevant and proactive advice.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.