On 6 October 2020, the Australian Government introduced personal income tax cuts as part of the 2020–21 Budget. These tax cuts bring forward legislated personal income tax cuts from 1 July 2022 to 1 July 2020.
The ATO have now released the updated tax rates so that these can be applied to people’s pays from now until the end of financial year.
If you are an employer, we would recommend that you check your payroll software to make sure you are using the current tax rates. If you manually calculate taxes, you can find the new rates at ato.gov.au/taxtables
Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards.
Some employees will notice the tax cuts in their take home pay within a few days or weeks. For others it may be longer.
Any over-withholding that occurred prior to the updates to payroll software or processes will be applied as credits when the employees lodge their 2020–21 income tax returns.
As always, if you get stuck or need help, please do not hesitate to contact one of the team here at Richards.