The Budget will bring forward income tax cuts scheduled for 2022 as announced during the 2020 Federal Budget. It means that more than 11 million taxpayers are eligible for tax cuts backdated to 1 July 2020.
Tailored Accounts Xero Payroll Specialist Fuzuki Nishimura closely observed the latest change of Xero payroll platform in reflecting the new tax tables for PAYG withholding. Xero has now released the updated PAYG tax tables so that your taxes will be calculated on the updated tables for all future pay runs.
Fuzuki’s tips to all SME clients to ensure an error-free pay run under the new tax cuts:
- If you have an existing pay run in the Xero pay run draft, please reset this to ensure the update pulls through.
- You do not have to process the manual adjustments as Xero has already uploaded the tables as of the time of this article.
- Xero also does not need to load the tax table manually. All figures will be automatically updated.
Benefits to your employees:
- The income tax threshold for 19 per cent will increase from $37,000 to $45,000, and lifting the 32.5 per cent threshold from $90,000 to $120,000, according to the ATO.
Tax cuts on a different level of earnings are as below:
- $40,000 earnings - 21% tax reduction
- $60,000 earnings - 17% tax reduction
- $80,000 earnings - 11% tax reduction
- $160,000 earnings - 5% tax reduction