New tax tables from Oct 1 2016
This is an important alert for all of you managing payroll, either for your own business or for your clients. The ATO have just announced that from 1st October 2016, some tax tables will change. You must ensure that you use the correct tables for the first payrun after September 30th 2016.
Why has this happened?
As part of the May 2016 budget, the government announced that some individual tax rates for the 2016-17 FY would change, namely that an individual’s marginal tax rate of 37% will start when his income exceeds $87,000 from 1 July 2016. The legislation regarding these changes was introduced to Parliament on 31st August 2016 but did not pass as several politicians were absent for the sitting that day. They have since met again and the bill was passed meaning the new tax rates will come into effect on 1st October 2016.
Do I have to amend employee payroll for July-Sept 2016?
No you do not. The legislation does not include any “catch up” component for payroll already processed this financial year.
Which tax tables have changed?
Most of them. Here is link to the ATO page outlining which tables have changed and which ones have not. Click here
Where can I find the new tax tables?
See the link provided above.
What do I tell my employees?
Those employees with annual income exceeding $80,000 may see a small change in their net pay. The best thing to do is to explain what is happening and why – perhaps show them this blog *wink*. The table below shows how the new tax rates will apply: