ATTENTION BUSINESS OWNERS
The government has brought forward tax rates changes so that they come into play immediately, but are effective from 1st July 2020.
Confused? Don’t be, here is what you need to do.
- Employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employee’s take-home pay.
- 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.
- Normally if you are using a software package, there is an update for the new thresholds and rates, so all the stress is taken care of.
These are the new thresholds and rates.
|Marginal tax rate||Thresholds- Income Range|
|19||18,201 – 37,000|
|** Need to add Medicare Levy **|
That’s the new tax rate changes moving forward, but what about the earlier pays? Do you need to go back and adjust them?
NO. Any over payment of tax, will end up being a tax refund when the employees lodge the 20/2021 tax return.
So, all you need to do is ensure that your payroll system is up to date and that the new rates are being used from now on. Simple!!