Changes To Tax Withholding In Australia

Changes To Tax Withholding Amounts - 9 November 2017

Changes To Tax Withholding In Australia

Withholding On Salary And Wages

The way tax is calculated on salary and wages has changed.

From 1 July 2017, the:

  • temporary budget repair levy has been removed
  • Medicare levy low-income threshold increased.

TFN Withholding For Closely Held Trusts

Beneficiaries need to quote their tax file number (TFN) to the trustee to avoid having amounts withheld from their payments or unpaid entitlements.

If a beneficiary doesn’t quote their TFN before a payment or entitlement occurs, the trustee must withhold from the payment or entitlement, pay the withheld amount to the ATO, and lodge an annual report with details of all withheld amounts.

Withholding In Business Transactions

Any business or organisation carrying on an enterprise should quote their Australian business number (ABN) when supplying goods or services to another enterprise. If the supplier does not quote their ABN, the general rule is that the payer must withhold 47% (from 1 July 2017) from their payment and send the withheld amount to the ATO.

Withholding From Unused Leave Payments On Termination Of Employment

Under the pay as you go (PAYG) withholding system, when an employee leaves, you may have to withhold from unused leave payments. Information on how to work out the amount to withhold from payments of unused annual and unused long service leave when an employee leaves can be found on the ATO website.

Withholding From Dividends Paid To Foreign Residents

If you pay dividends to a foreign resident, the unfranked component of each of those payments is subject to a final withholding tax. Information on when and how much to withhold from dividends you pay to foreign residents can be found on the ATO website.

Businesses need to get their withholding obligations right. If you are unsure if your business is meeting its withholding requirements or are unsure how any of these changes may affect your business meeting its withholding obligations, contact us on (07) 3188 5627.

9 November 2017

For expert advice and assistance in dealing with your Business Employment Taxes in Australia, please contact Mathews Tax Lawyers on 1800 685 829

Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.

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