What has changed?
Until now, the middle tax rate of 32.5% has applied to individuals earning between 37,001 and $80,000. The good news is that the upper limit is about to be increased to $87,000.
What does this mean?
Anyone earning more than $80,001 will benefit from a small tax cut as they will only be taxed at 32.5% on their earnings between $80,001 and $87,000 rather than the current 37% rate. A small cut, but one definitely worth having!
What do I need to do?
If you are an employee, you need do nothing. Your employer is required to make the adjustment to your wages and you should see a small increase in your take home pay from 1 October. If you are an employer, you will need to ensure you make this adjustment as soon as possible.
Payroll packages such as MYOB, Xero and Quickbooks will have updated their software so that you do not need to take any action. This means that the updated rates will immediately take effect and your employees will automatically be paid according to the new rates. If, however, you calculate wages manually, you will need to make the adjustment yourself in order to ensure you calculate wages accurately.
Further information about the changes in tax rates can be found on the ATO's website. You can also check out our website for a summary of other changes introduced in the budget.
Stone Accountants & Advisors offer a comprehensive small business accounting and business support service that ranges from business set-up to business succession, taxation, bookkeeping and even payroll. If you would like some assistance with your payroll or help in choosing a software package that will meet your needs both now and into the future, we're here to help. Give us a call on (03) 9870 7247 or email us on firstname.lastname@example.org.