The ATO will be publishing updated tax withholding schedules shortly, perhaps in a matter of days.
Despite the tax cuts being backdated to July 1st this year, the ATO has stated that it will not adjust withholding schedules to account for any over-withheld amounts that individuals have accrued since this date.
What does this mean for you?
As per Accountant’s Daily:
- The over-withheld amount will be factored into the tax assessment of an individual at the end of the income year
- Employers will need to adjust their payroll processes and systems in order for the tax cuts to be reflected in people’s take-home pay
- Any ‘over-withholding’ that occurred before the employer updates their payroll software and processes will be included in the employee’s tax assessment at the end of the income year
- These adjustments may differ depending on the employer
- Employees may notice the difference in their take-home pay within a few days or weeks for some; longer for others
- The ATO is currently unable to adjust the PAYG overpaid since July 1st, 2020. Therefore, there may be a delay in ‘backpay’ for many salary and wage earners for overpaid amounts this financial year.
- Non-salary and wage earners can immediately take advantage of the tax cuts by varying their September quarter instalment (this instalment is due on 28 October, 2020).
“Small-business entrepreneurs are mostly unincorporated entities and therefore are also beneficiaries of the stage 2 tax cuts,” The Institute of Public Accountants chief executive Andrew Conway told Accountants Daily. “We are encouraging all our members to vary down PAYG to take advantage of this initiative.”
Be sure to stay tuned for more information on tax cuts and the tax withholding schedule as it is released. If you require any assistance or clarification, don’t hesitate to contact us today.