Businesses need to note that the current thresholds apply for the first 3 months and 30 days of the 2024–25 tax year; the new thresholds for the remaining period. For the 2024-25 year only, composite tax rates will apply:

Taxable Income Composite tax rate

Employers need to ensure their payroll providers make the necessary changes to their systems for 31 July.

The tax threshold changes have a knock-on effect on fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), retirement scheme contribution tax, RWT and prescribed investor rates.

The new thresholds for FBT which effectively apply from 1 April 2025 are (noting that for the year beginning 1 April 2024 a new attribution method formula effectively accounts for the newly introduced income tax thresholds):

The proposed thresholds for ESCT applying from 1 April 2025 are:

RWT is affected from 31 July 2024. Taxpayers who pay RWT on interest and dividend income should consider whether they should change their elected RWT rate to align with increases to the personal income tax threshold.

Contact us if you would like to discuss the impact on your business systems, including your FBT programme. If you earn interest or dividends or if you pay business related interest to family and friends, please talk to us.

Disclaimer: This blog has been carefully prepared, but it has been written in general terms only. The blog should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.