23rd June, 2015
As a business owner, one of the key areas that you need to stay on top of is tax changes.
If you’re not vigilant, you could miss important changes that impact your business. Then you’ll end up wasting time trying to pick up the pieces.
Here’s what you need to know to avoid this.
You most certainly need to ensure you keep abreast of any changes in this area.
The last thing you want is a disgruntled employee coming to see you in July or August after they have had their tax return prepared, telling you that they have a tax bill because you didn’t deduct enough tax from their pay.
Quite often this employee had their heart set on what they were going to do with their tax refund and worse still they may have already gone out and made that purchase or paid for that holiday knowing that it would be covered by their tax refund!
Seriously, this happens and I have been that accountant sitting across the desk having to explain that “no, I definitely haven’t made a mistake but your employer has”.
This situation can be avoided by ensuring that your software always has up to date tax tables.
Tax tables are produced & updated by the ATO each year. They tell you how much you need to withhold from payments you make to your employees.
In Australia, we have a progressive tax system. It works on ‘tax brackets’ and at each bracket, different levels of tax is paid.
For example, if one of your employee’s earns less than $18,200 they will pay no tax.
For amounts over $18,200 and up until $37,000, they will pay tax at 19 cents in the dollar.
As your employee earns more and more, they will progressively pay a higher tax rate on certain amounts of their income.
The below table show the latest tax table updates for tax on the income.
Tax Rates 2015-2016
|Tax on this income
|$18,201 – $37,000
|19c for each $1 over $18,200
|$37,001 – $80,000
|$3,572 plus 32.5c for each $1 over $37,000
|$80,001 – $180,000
|$17,547 plus 37c for each $1 over $80,000
|$57,547 plus 45c for each $1 over $180,000
Compulsory superannuation rate: 9.5%
There are different tax scales depending on the individual’s circumstances.
For example: An income earner with a HELP debt will utilise a different tax table to ensure the correct calculation of their payment.
Under our progressive tax system, the rates are based on the concept that high-income taxpayers can afford to pay a higher tax rate and low-income taxpayers pay not just lower taxes overall, but a lower percentage of the income they do have.
I’m sure that you have enough going on in your business that you don’t need to be constantly checking the news and newspapers to see if certain tax measures get passed or not.
This is something you can leave to the accounting software providers like MYOB who ensures your software is constantly up-to-date to reflect ATO requirements.
All you need to do is to ensure that at all times you are using the latest version of your software and you can concentrate on operating your business – doing what you are best at, doing what you like doing and making money.
To ensure your software is on the latest version, visit myob.com.au/upgrade.
In the last few weeks, you would’ve received a letter from the Deputy Commissioner of Taxation from the Australian Taxation Office (ATO), stressing the importance of being compliant by updating your tax tables.
The tax tables help you work out your obligations as an employer, particularly calculating how much to withhold from payments to employees.
Subscribing or upgrading your MYOB software will ensure your business is always compliant with tax changes, including the government’s new SuperStream system for paying super contributions. If you don’t have MYOB accounting software, subscribing to a 12-month subscription enables small businesses with a full tax deduction.* Get your 12-month subscription today.
*Under the s8-1 of the ITAA 97, a full tax deduction applies when pre-paying for a 12 month subscription, for a small business (less than $2 million). Annual renewal is required from the day of subscribing. The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’s circumstance will vary for end of financial year.