The recent 2021 Federal Budget announced various incentives designed to ease the burden of COVID 19 for businesses and individuals; you can read our budget re-cap here.
One of the major announcements that effects businesses and employees alike is the introduction of tax cuts for employees, which will see most people pocket more of their wage each pay day. New PAYG withholding tax tables have been released by the ATO and were backdated to be made effective from the 1st of July 2020. Employers will need to be familiar with the new thresholds and initiate the changes for payments made on and from the 13th of October 2020.
However, software providers are continuing to update their platforms to accommodate for the change, and employers have been granted until the 16th of November to ensure they are withholding the correct amount from their employees’ pay based on the new rates.
Since the changes to the personal income tax thresholds were implemented part way through the financial year, any ‘over-withholding’ that may have occurred during the transition period, or until businesses had the chance to apply the new rates will be included in the employee’s income tax assessment for 2021. No backdated or additional payments will need to be made by employers.
– Catherine Stojcevska & Nicola Dawson
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