The 2020 Federal Budget (delivered on 6 October 2020) revealed multiple changes that impact the workforce, and the payroll teams that support them. Here’s our summary of these changes.
Changes to personal income (tax cuts)
The Federal Government has announced updates to the income tax brackets. These changes will be backdated to July 2020, as part of $17.8 billion in personal income tax relief.
Please Note: Whilst this change doesn’t require updates to Aurion software, we have published a tax rates update. Our customers can access and download the file 2020/2021 Australian Tax Rates Import by logging into our End of Financial Year (EOFY) Resource Centre.
The Government also announced that stage 2 of its Personal Income Tax Plan will be brought forward and apply for the 2020-21 income year, resulting in the following income tax rates (for Australian residents) and approximately another $8.1 billion in tax relief.
| 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 |
These changes would also increase the low-income tax offset (LITO) from a maximum amount of $455 to $700 per annum for the 2020-21 income year and future years.
The ATO has also published updated tax withholding schedules that apply to payments made in the 2020–21 income year. As the changes to withholding are made part way through the income year, employers and other payers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so.
JobMaker: Incentives to hire and train new workers
The Federal Government also announced the ATO will administer a new incentive for businesses to employ additional young job seekers called the JobMaker Hiring Credit. Eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.
Employers will register with the ATO and make claims quarterly, with claims commencing in February 2021. The impact to payroll teams is currently not clear, but Aurion will provide more information and support guides for customers when the ATO has confirmed the full claim process.
Changes to superannuation accounts and set-up
The Federal Government has put forward a plan aimed at reducing the amount of money Australians spend maintaining their superannuation account, ensuring that they get more in retirement. The new superannuation plan will see Australians have their first super account attached to them “for life” so they don’t have a new one created each time they start a new job, attracting additional account keeping fees.
It’s proposed that the administration of sign up to a new superannuation fund will be managed by the ATO via the MyGov Portal. The impact to payroll teams and the employee onboarding experience is currently not clear, but Aurion will provide more information for customers when the ATO has confirmed the updated superannuation management process.
Visit the Budget 2020-21 website to access fact sheets on all the topics covered here: income tax relief, JobMaker and superannuation reform.
Learn more about how Aurion software integrates legislative changes and keeps you compliant: see our blog – Aurion releases updated solution for JobKeeper 2.0 extensions and subscribe to our mailing list today.
