ATO Tax Tables Change As A Result Of May 2016 Budget

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In following from the May 2016 budget discussions, the government will be making some adjustments to the individual income tax rates. This, in effect, will also adjust the tax rates on wages paid to your employees.

This change will see an individual’s marginal tax rate of 37% start when their income exceeds a total of $87,000 in taxable income. The current threshold is $80,000 before the 37% kicks in.

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While this hasn’t officially been passed by the government, the ATO have attended to the required updates for the tax rates, in anticipation this will go through. Effective from Saturday, 1 October 2016, there will be new tax withholding rates on all wages being paid to your employees.

Note that for all wages paid before this date, the old tax table rates will apply. You do not need to make any adjustments to previous pays being made to your employees.

 Note the following methods on how to update your payroll system:

  1.  For those who attend to payroll manually, the new weekly (NAT 1005), fortnightly (NAT 1006) and monthly (NAT 1007) tax tables are available for download from https://www.ato.gov.au/Rates/Tax-tables/.
  2. For those using a MYOB File:

    a. Create a backup
    b. Open your file
    c. To confirm you’re using the latest tax tables, go to the Setup menu and choose General Payroll Information.  The Tax Table Revision Date should be 1 October 2016.
    d. If not, go to Setup menu and choose Load Payroll Tax Tables
    e. Click Load Tax Tables

  3. For those using a QuickBooks / Reckon File:

    a. Create a backup
    b. Open your file
    c. Click Employees, then Get Payroll Updates
    d. Click to select Download Entire Payroll Update
    e. Click Update
    f. Depending on your settings, some files would have automatically already downloaded this updated. To receive payroll tax table updates automatically when they are released, turn on the automatic updates feature.
    g. To do this: Help Menu, Choose Update QuickBooks, Click the Options tab, Select Yes for Automatic Update, in the Updates list select Mark All, Save and Close.

  4. For those using Xero, note that changes to PAYG tax and superannuation guarantee rates are taken care of automatically, without the need to install any updates.

Also, please ensure you have been correctly setup with SuperStream. Most payroll systems within cashbooks are now setup to use SuperStream when paying super for your employees. However, for those that are not, you need to be compliant with this update by 28 October 2016. If you require any assistance with this, please contact our office.

By: Amy Wren

Email: akw@accession3.com

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