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Changes announced to ATO withholding amounts

Following an announcement in July, the Australian Government recently increased the 32.5 per cent tax threshold from $37,001 – $80,000 to $37,001 – $87,000.

The new PAYG withholding rates will apply to individual taxpayers who earn more than $80,000 from 1 October 2016.

The Australian Tax Office provides a range of tables to assist employers work out how much to withhold from payments they make to their employees. Since the latest edition of the new tax tables is now available, employers should use these new tax tables for payments made from 1 October 2016.

The Tax Office also provides a tax withheld calculator employers can use to calculate the correct amount of tax to withhold. The tax withheld calculator applies to payments made in the 2016-17 income year and provides the correct rates for the 2016–17 income year.

Updated tax tables do not include any catch-up component for the portion of the year which has already passed. Individuals who are affected will receive the full benefit of the tax changes upon an assessment of their income tax return for the 2016-17 income year.

Employers do not need to make any other adjustments or refunds as the ATO will refund any over-payment of tax when employees lodge their 2016–17 income tax return.

Posted on 18 October '16 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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