Happy new financial year!
You have probably by now received your first pay for the 2015 financial year.
Unfortunately, there are a few reasons why your take home pay has reduced from last financial year.
New financial year
Each time there are changes to tax or other rates (usually in July, being the start of the new financial year), employers are required to use new rates of withholding from salaries and wages.
What are the main changes?
- Increased Medicare Levy
The main change for everyone is the increase of 0.5% (from 1.5% to 2%) of the Medicare Levy.
This means that an additional 0.5% will need to be withheld from your wages to cover this increased tax.
- Increased Superannuation rate
The other change is that an additional 0.25% (from 9.25% to 9.5%) of compulsory superannuation (called Super Guarantee Charge).
It will depend on your employment contract whether this increase is covered by you or by your employer.
For high earners
If salary amounts above $180,000, the marginal tax rate has increased by 2%, which the government is using to help reduce the deficit.
This means that the additional 2% tax will need to be withheld from your wages to cover the increased tax.