Did you know that the ATO is updating its tax tables from 1 October?
In May, the government announced changes to individual tax rates for the 2017 financial year, with legislation delayed due to the federal election.
The ATO, expecting the relevant legislation to be in effect by the October deadline, is getting prepared to change the tables.
It means that many may miss out on the changes simply because they don’t occur within the more regular EOFY window that people are used to.
A number of tax tables have, in preparation, been updated to apply from 1 October – meaning you may be caught on the hop if you’re not prepared.
The main changes relate to the Medicare levy reduction threshold – which has been increased for some employees, with the 37.5 percent tax rate applying to employees earning at least $87,000 per year.
That’s up from the current mark of $80,000.
So which tables will be affected by the 1 October changes?
Statement of formulas
Other Tax Tables
One of the important things here is that the updated tax tables don’t include any catch-up component for the portion of the 2017 financial year which has already passed by 1 October.
Individuals affected will get the full benefit of the tax changes when their income tax return is assessed for the year.
You can find a full list of the updated tables here.
Higher Education Loan Program (HELP), Student Start-up Loan (SSL) and Trade Support Loan (TSL)
Student Financial Supplement Scheme (SFSS)
Other tax tables
These may or may not apply to you. By 1 October, make sure you have checked that you have the latest tax tables relevant to your business, and that your accounting software loads in the latest changes.
If you’re an existing MYOB Essentials user, you can relax.
Your software will be automatically updated with the new tax scales in advance of the 1 October deadline.
For MYOB AccountRight users there will be a 2016.2.2 update made available in the last week of September. This will need to be installed prior to your first pay run in October.
Once the update has been installed, simply go the Setup Menu and select Load Payroll Tax Tables. You will then be ready with the up-to-date tax scales.
While we’re on the subject of impending deadlines, while most businesses are on the SuperStream train, some have not complied as yet. The ATO has extended its compliance deadline out to 28 October.
The ATO had originally set a deadline of 1 October for the change, but it extended the deadline for businesses with 19 or fewer employees.
From 1 November, the ATO will be cracking down on SMEs who have not made the switch, so make sure either you or your accountant is aware of the changes.
“It’s critical, especially in the lead-up to October, that SMEs select the easiest and most efficient way to comply with the ATO regulations,” said James Scollay, MYOB General Manager of SME Solutions.
“One option includes using a payroll system that meets the required standards.
“When customers move to the latest version of any MYOB payroll product they will have the tools to be fully compliant and, in many cases, will also be able to save costs and reduce time.”