Following the government's budget announcement, stage 2 of its Personal Income Tax Plan will be brought forward and will apply for the 2020/21 financial year.
What does this all mean? You can read more about it here the following tax rates have changed and taken effect for all new pay runs with a date paid of 13 October 2020 and thereafter:
- Weekly, fortnightly and monthly tax tables for Australian residents;
- Tax thresholds for working holidaymakers; and
- Tax thresholds for foreign residents.
This was only enacted on 12th October 2020. The full legislative instrument can be accessed here.
We have applied the tax changes in the system and PAYG will automatically calculate accordingly based on the date paid of any new pay run created. To clarify, users are not required to manually import or update any tax tables themselves.
There is one exception to this though, and it is voluntary! If you currently have an unfinalised pay run open with a date paid of 13/10/2020 or later and such pay run was created prior to you receiving this update, then the new tax rates will not have applied. If you want the new rates to apply to that pay run, you can either:
- delete the pay run and create it again; or
- recalculate every employee's pay.
If you do neither of the above then rest assured the employee will receive their entitlement to the reduced tax payable (if eligible) when they lodge their tax return.
Also, take note that if you do neither of the above but conduct any type of action that requires saving the employee's pay (such as adding an earnings line or deduction, applying a leave request or expense request, etc) this will refresh the employee's pay and the new tax rates will then be used to calculate the employee's PAYG amount.
Lastly, we are aware that this last-minute update may cause an inconvenience to some of you. As stated above, this ruling was only enacted yesterday so we have had less than 24 hours to get this across the line. The ATO has stated that businesses have up until 16 November 2020 to implement the new changes. We have, however, made this our number one priority since receiving confirmation on October 12th with the aim of releasing the changes as soon as possible and thereby minimising, as much as possible, any disruption to our users.