Tax Cuts are beginning from 13 October 2020.
Employers will begin to implement the new tax rates between 13th October and 16th November.
Employees earning over $37,000 per year will begin to gain the benefits of the new rates from a pay date during that period.
As the new rates are backdated to 1st July 2020, any tax saved between July and Oct/Nov, will be paid, by the ATO, once the tax return is finalised in the second half of 2021, July/August for many people.
The Changes
The 19% tax bracket start has risen from $37,000 to $45,000.
The 32.5% tax bracket start has risen from $90,000 to $120,000.
2020/21 Tax Rates
| Taxable income | Tax on this income |
|---|---|
| 0 to $18,200 | Nil |
| $18,201 to $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 to $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 to $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
Source: Australian Taxation Office