The Federal budget for 2020-21 has brought a number of changes to personal tax. In an effort to aid economic recovery, the budget has included shifts in personal income tax brackets.
According to the government, changes to the income tax thresholds have been integrated into the withhold schedules and tax tables. Such changes will need to apply to payments made by the 13th October 2020 and onwards. Because these changes come into effect partway through the year, a grace period has been afforded to businesses unable to immediately implement the changes extends to 16th November 2020.
Employers should ensure to review the updated tax tables on the ATO website and implement the tax cuts to their employees no later than 16th November 2020 . If there has been over-withholding, this will obviously be reimbursed in the employee’s tax assessment after the end of the 2021 financial year.
Redundancy and Early Retirement
In addition, new legislation passed in October 2019 that extended the concessional tax treatment of genuine redundancy and early retirement scheme payments. This was extended to people who had reached the age-based limit of 65 years but not the age-pension age. The changes apply to payments received by employees who are dismissed or retire on or after 1st July 2019.
This may impact withholding calculations for some employees when using Schedule 7 – Tax table for unused leave payments on termination of employment and Schedule 11 – Tax table for employment termination payments.
If you need clarity on how these changes affect your personal circumstance, please do not hesitate to speak with one of our tax specialists.
Lauren Steinheuer: L.Steinheuer@uhyhnseq.com.au
Dean Vane: D.Vane@uhyhnseq.com.au
Malcolm Barkle: M.Barkle@uhyhnseq.com.au