What are the new tax rates for FY2020/21 and when will I see them in my pay packet?
On 6 October 2020, the Australian Government introduced personal income tax cuts as part of the 2020–21 Budget. These tax cuts bring forward legislated personal income tax cuts from 1 July 2022 to 1 July 2020.
Changes to personal income tax thresholds announced by the Government during the Federal Budget have been incorporated into the withholding schedules and tax tables and will apply to payments made on and from 13 October 2020.
With the withholding taxes changes being made part-way in this financial year, the ATO has allowed employers up until the 16th November 2020 to apply the new tax rates in pay runs.
Xero updated the tax tables on 23 October 2020 so that all payruns that have been processed from that date incorporate the reduced tax and hence greater take home pay.
Employees will receive their entitlement to the reduced tax payable for the entire 2020–21 income year, from 01July, when they lodge their income tax return as a credit for the higher, prior tax rate that has already been paid to this point.
The new tax rates for FY2020-2021 are as follows..
- Resident tax rates
Also applies to individuals treated as Australian residents for tax purposes.