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The Australian Tax Office have introduced new tax tables effective from 1 October 2016. Here is what you need to know about the changes and what you need to do for these changes. The most remarkable change is the tax threshold for the 37% marginal tax rate for individuals which has increased from $80,000 to $87,000. These changes were due to be implemented from 1 July 2016 however this was delayed to the 1 October.
Visit www.ato.gov.au/Rates/Tax-tables/ to review the new withholding tax tables.
It is important to note that the new tax tables don’t take into account any tax withheld prior to the implementation date of 1 October. This means that individuals affected by the change will be entitled to a bit more of a tax refund than they otherwise would have been for 2017 tax returns, as they will be credited the extra tax paid between 1 July & 1 October.
What do the tax tables mean for business owners?
This will depend on how you pay your employee wages. Here are three common scenarios and what you need to do in each:
- If you use Xero: If you use Xero, you don’t have to do anything, Xero will have automatically updated the back end on 1 October.
- If you use MYOB, Reckon or similar software: If you use other accounting software such as MYOB or Reckon, it is best to contact your provider to confirm that the update has happened automatically. If it hasn’t you will need to download the new tax table and update the software yourself as being effective from 1 October.
- If you process wages manually: The easiest and most efficient way to ensure you are withholding the correct amount of tax is to visit www.ato.gov.au/Rates/Tax-tables/ and use the tax withheld calculator provided in reference to the tax tables applicable to your business.
If you need any further information about these ATO changes or other business tax, contact Acumon today on 4931 1100.