Are Your Employees Impacted by Tax Cuts?


Yesterday, 20th October 2016, new tax laws received Royal Assent resulting in a change to the individual tax rates. The 32.5% tax threshold has now been increased from $37,001 – $80,000 to $37,001 – $87,000. The changes will impact individuals earning over $80,000 and will take effect from 1 July 2016. Whilst the new rates apply from 1 July 2016, employers are required to adopt the new tax tables for payments made from 1 October 2016. Employers do not need to make any other adjustments or refunds. The ATO will refund any over-payment of tax when your employees (and payees) lodge their 2016-17 income tax return.

Below is the updated individual tax rates that apply to Australian resident individuals, from 1 July 2016:

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

The above rates do not include the:

  • Medicare levy of 2%
  • Temporary Budget Repair Levy; this levy is payable at a rate of 2% for taxable incomes over $180,000.

Be aware, the new threshold will also apply to foreign residents.

Remember, our team are here to help you. If you need assistance with applying the new tax rates simply contact us and we’ll get you on the right track.