Compliance
Staying Compliant With PAYG Withholding Updates for 2026-27
Employer obligations are changing: new tax tables and schedules for PAYG withholding kick in from 1 July 2026—avoid costly errors by updating systems now.
By NomadicTax Research Team • 5-8 min read • June 15, 2026
## What’s Changing in Withholding from 1 July 2026
The ATO has released updated **Pay As You Go (PAYG)** withholding tax tables and schedules, including **NAT 1004 (employment)**, NAT 3539 (study and training support loan repayments), and others. These changes take effect from 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai)) Changes reflect:
- Reduced marginal rates for certain income bands (previously legislated in Budget 2025-26). ([austax.tools](https://austax.tools/tax-insights/whats-changing-australian-tax-2026-27/?utm_source=openai))
- Updated thresholds for loan and levy repayments. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
- Minor formatting or presentation changes, primarily for accurate calculations. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
## Key Compliance Risks and How to Mitigate Them
| Risk | Consequence | Mitigation |
|---|---|---|
| Payroll software still using old tables post-1 July 2026 | Under- or over-withholding; employee payroll errors; frustration and possible penalties. | Update payroll systems with new tax tables; confirm date settings ensure changes apply from 1 July. |
| Not adjusting for updated thresholds in STSL and other loan repayments | Misreported withholding may cause debt or liability to employees. | Review all schedules that affect employees and contractors; communicate changes internally. |
| Not retaining records of versions used | Audit exposure; difficulty justifying withholding decisions. | Keep original documents; date stamps and source URLs. |
## Steps to Ensure Smooth Transition
1. **Obtain official versions** of all relevant tax tables from ATO’s PAYG withholding page. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
2. **Update payroll or accounting software** with new schedules, ensuring changes activate as of 1 July 2026.
3. **Communicate to employees and contractors** any change to net pay due to taxation changes.
4. **Test payroll** runs for early July and August to catch miscalculations.
5. **Document your compliance processes** for payroll, including versioning and change logs.
## Example Scenario
Imagine a business paying staff $800/week: previously, deductions and levies were based on older thresholds. From 1 July, updated STSL repayments and marginal rates may slightly reduce or increase net pay depending on workers’ earnings and loan obligations.
Businesses should run parallel payroll for July using both old and new tables to see differences before formal use.
**Takeaway:** Withholding changes are relatively “quiet” reforms but fundamental to daily payroll. Ensuring your systems are updated and staff are aware saves time, money, and regulatory headaches.