The Tax Office has now updated its withholding schedules and tax tables to reflect the new personal income tax thresholds that were passed by Parliament last week.
The changes will apply to payments made on and from 13 October this year, with employers now given until mid-November to implement the adjustments.
“As the changes to withholding are made part way through the income year, employers and other payers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so,” the ATO said.
While the tax cuts have been backdated to 1 July this year, the tax table changes do not take into account any over-withheld amounts that individual taxpayers have paid since the start of the financial year.
Instead, this over-withheld amount will be factored into the tax assessment of an individual at the end of the income year.
“Employees and other payees will receive their entitlement to the reduced tax payable for the entire 2020–21 income year when they lodge their income tax return,” the ATO said.
View the updated tax tables here.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.