As part of the Federal Budget, the Government announced changes personal income tax thresholds that apply to payments made on and from 13 October 2020.
The ATO recently updated tax withholding schedules to reflect the 2020–21 income year personal tax cuts.
If you’re an employer, you need to make adjustments to your payroll processes and systems to ensure the tax cuts are reflected in your employee’s take-home pay.
As the changes to withholding have been made part way through the income year, employers have some additional time implement them.
You need to have made the necessary adjustments, and be withholding the correct amount from salary or wages paid to employees for any pay runs processed in your system by 16 November 2020.
If you’re an employee, you may not notice the tax cuts reflected in your pay for a few days, or even weeks. This is because the complexity of the adjustments can differ for each employer. However, any withholding on the old scales will be taken into account in your tax return.
Remember, you can always contact us if you need advice on what you need to do.