With the news of the 2020 Federal Budget bringing forward the Coalition’s three-stage tax cut package. Our payroll services in the eastern suburb of Sydney have implemented the new tax tables into our facility for our small business customers.
The ATO has announced that since changes have been made partway through the income year. All the employers have until 16th November 2020 to do so.
Employees and other payees will receive their entitlement to the reduced tax payable for the entire 2020–21 income year. After lodging their income tax return.
Employers seek to pay their workers an accurate amount. Payroll providers are working to have their products updated with the correct tax tables implemented.
A statement released to its customer base last Friday. Reckon announced that they have updated their systems with the tax changes.
“The Government announced changes to personal income tax thresholds for the 2020-21 income year in the 2020 Federal Budget. Changes to income tax tables took effect from 13 October 2020.
We have updated the 2020-21 ATO PAYG tax tables in Reckon One, so there is nothing else you need to do. Pay runs dated from 13 October 2020 automatically use the 2020-21 PAYG tax tables.”
Xero has updated their software to reflect the new tax tables in Xero Payroll. They want to match the new withholding rates as of 13th October 2020. Employers have a grace period up to 16th November to start using the new table, however, it would be wise to use them as soon as possible to avoid any confusion.
MYOB have updated their products in line with the tax changes last week. This reflects all their products updated with new tax tables well ahead of the 16th November deadline.
QuickBooks have updated their payroll system to match the new withholding rates as at 13th October 2020. Employers have a grace period up to 16th November to start using the new table, however, it would be wise to use them as soon as possible to avoid any confusion.
What are the tax cuts?
The income tax threshold for 19% will increase from $37,000 to $45,000 and lifting the 32.5% threshold from $90,000 to $120,000.
In 2020-21 tax years, single low and middle income earners will receive up to $2,745 tax relief and dual income families can receive up to $5,490 in refundable tax offsets.
The new tax cuts are as followed
- All Income owners with $40,000 earnings will have a 21% tax reduction
- Income owners with $60,000 earnings will have a 17% tax reduction
- 11% tax reduction for the Income owners with $80,000 earnings
- Income owners with $160,000 earnings will have a 5% tax reduction
For further information on our Payroll Services, feel free to get in contact with our Accountants at R T Accounting & Taxation Services.