In a previous blog we outlined the lower personal income tax rates announced in the Federal Budget. If you are unsure what your business need to do next, here’s a quick checklist:
- New tax rates apply to payments made on and after 13 October 2020. You don’t need to make any backdated adjustments. Any refunds related to wages that were ‘overtaxed’ from 1 July 2020 to 13 October 2020 will be made when employees lodge their 2021 tax returns.
- Check that your software provider has updated the tax tables for the 2020/2021 financial year. The easiest way to do this may be to run your payroll to check that the tax withheld reduces and net pay increases. All pays made after 16 November need to be using the new reduced tax rates.
- If you want to review the pays calculated by your software or prepare payroll manually, details of the new tax tables are here and you can use the ATO Tax Withheld Calculator to calculate tax to withhold and net pay.
- Remember to update any recurring regular bank transfers for wages so employees get paid their new higher net pay amount going forward.
Use the handy tax relief calculator to give employees an idea of their tax saving.