Are you withholding the right amount?
Posted 23 Sep 16
By Anthony Gomes
During the May 2016 budget the Government announced a $7,000 increase in the upper threshold for the 32.5% marginal tax bracket from $80,000 to $87,000 effective starting the 2016-17 Financial Year.
The increase means that less tax will be withheld from employees in the middle tax bracket whilst any tax paid at the higher rate prior to this date will be refunded upon the lodgement of their 2017 income tax return.
As a result, new PAYG withholding tables which will be effective from 1 October 2016 have been released for employers to calculate the correct amount of tax to be withheld from employee’s wages. Similarly, other withholding tables which are dependent on the marginal tax brackets such as the Medicare Levy Adjustment tables have also been released. A list of all updated tables effective from 1 October 2016 can be found here.
Employers should ensure that their payroll software is up-to-date when performing the first pay run in October and it may be worthwhile sample testing payroll data against the withholding tables to ensure that your withholding obligations are met. Failure to do so can lead to administrative penalties of up to $1,800 per offence.
Click here to contact our Specialist Tax team for more information.