Navigating the New Tax Landscape

As Australian businesses and individuals prepare for the new financial year, it’s crucial to stay informed about the latest tax changes. The Australian Taxation Office (ATO) has released updates that will be applicable from 1 Jul 2025. This article highlights key changes and provides essential information to ensure compliance.

For the most accurate and up-to-date information, always refer to the official ATO website and use the search code QR16945.

Understanding the New Tax Rates and Withholding Schedules

The ATO produces a range of tax tables to help you work out how much to withhold from payments made to employees or other payees. A tax withheld calculator is available on the ATO website to assist with accurate calculations. Tax tables marked with an asterisk (’*’) have downloadable look-up tables in PDF format. Tax tables for previous years are also accessible.

Key Highlights for 1 July 2025 Updates:

• Study and Training Support Loans: Due to the annual indexing of repayment income thresholds for study and training support loans, Schedule 8 - Statement of formulas for calculating study and training support loans components (NAT 3539) and relevant weekly, fortnightly, and monthly tax tables have been updated.
• Lump Sum E Payments (Back Payments): As a result of new legislation concerning the treatment of lump sum payments in arrears for Medicare levy purposes, Schedule 5 – Tax table for back payments, commissions, bonuses, and similar payments (NAT 3348) has been updated. The $1,200 Lump Sum E threshold has been removed. From 1 Jul 2025, all back payments that accrued more than 12 months before the date of payment must be treated as Lump Sum E, regardless of the amount.
• Income Tax Cuts Delayed: It is important to note that the income tax cuts introduced by the Treasury Laws Amendment (More Cost of Living Relief) Act 2025 will not commence until 1 Jul 2026 (the 2026-27 income year).

Staying informed about these changes is essential for accurate payroll processing and tax compliance. Businesses should review the updated tax tables and adjust their systems accordingly to ensure they are withholding the correct amounts from their employees and other payees.

For detailed information and to access the updated tax tables, please visit the official ATO website and search for QR.16945. Consulting with a tax professional can provide tailored advice and ensure your business remains compliant with the latest regulations. Contact us if you need advice.

Disclaimer: This article provides general information only and does not consider your individual circumstances. It is not a substitute for professional tax advice. Specific advice should be sought from a qualified tax professional before making any decisions.