The Turnbull Government recently announced a change in the tax threshold from July 1, 2016 that impacts on both individual taxpayers and employers.
For Individual Tax Payers
From 1 July, 2016 for individual taxpayers the marginal tax rate of 37 per cent will start at $87,000 rather than the current $80,000. Individual taxpayers with a taxable income of more than $80,000 will benefit from this threshold change.
The adjusted tax rates table for resident taxpayers is included below, with the changes in bold:
Updated tax rates for resident taxpayers:
| Taxable Income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $87,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $87,001 – $180,000 | $19,822 plus 37c for each $1 over $87,000 |
| $180,001 and over | $54,232 plus 45c for each $1 over $180,000 |
For Employers
The changes made to the tax thresholds means that for employers the tax tables have changed for employees who earn over $80,000. New tax tables and payroll software updates will apply from 1 October 2016.
Although the threshold change is backdated to 1 July 2016, employers do not need to make any other adjustments or refunds as the ATO will refund any over-payment of tax when employees lodge their 2016-17 income tax return.
All employers, if they haven’t already, should contact their software provider for the relevant payroll software updates or download the latest tax table from the ATO website (ato.gov.au/taxtables). Please contact our office if you need any assistance with this update.