2020–21 personal tax cuts

On 6 October 2020, the Australian Government introduced personal income tax cuts as part of the 2020–21 Budget. These tax cuts bring forward legislated personal income tax cuts from 1 July 2022 to 1 July 2020.

You and your employer clients can use the 2020–21 tax tables at ato.gov.au/taxtables to withhold the right amount of tax for employee payments from their next pay.

Employers now need to make adjustments in their payroll processes and systems in order for the tax cuts to be reflected in employee’s take-home pay. Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards.

Some employees will notice the tax cuts in their take home pay within a few days or weeks. For others it may be longer.

Let your employer clients know they don't need to make any other adjustments or refunds for their employees. Any over-withholding that occurred prior to the updates to payroll software or processes will be applied as credits when the employees lodge their 2020–21 income tax returns.

We are working closely with payroll software providers as they work towards updating their software by 16 November 2020 to reflect the reduced withholding associated with income tax threshold changes. Your software provider will keep you updated on these changes.