How will the new tax cuts and withholding amounts issued by Australian Government affect small businesses?
The Australian Government has increased the 32.5% tax threshold from $37,001 – $80,000 to $37,001 – $87,000. How will this influence tax cuts for businesses?
What does this mean for employers?
The tax tables have changed for employees who earn over $80,000.
You need to download the updated tax tables from ato.gov.au/taxtables or contact your payroll software provider for the relevant update.
Do employers need to make any other adjustments?
The new tax tables are effective from 1 October 2016. You don’t need to make any other adjustments or refunds as we will refund any overpayment of tax when your employees (and payees) lodge their 2016-17 income tax return.
Tax tables
The ATO produce a range of tax tables to help you work out how much to withhold from payments you make to your employees or other payees. A tax withheld calculator that calculates the correct amount of tax to withhold is also available at www.ato.gov.au/Calculators-and-tools/Tax-withheld-calculator/.
In the May Budget, the government announced changes to individual tax rates for the period from 2016 to 2017 income year. Legislation dealing with those announced rates was introduced to Parliament on 31 August 2016. As a result, a number of tax tables have been updated to apply from 1 October 2016. Those tax tables that have not been updated will continue to apply.
Updated tax tables do not include any catch-up component for the portion of the year, which has already passed. Individuals affected will receive the full benefit of the tax changes upon assessment of their income tax return for the period covering the period from 2016 to 2017 income year.
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