ATO: New PAYG withholding tax rates New PAYG withholding tax rates apply from 1 October 2016. The 32.5% tax threshold has increased from $80,000 to $87,000 in the withholding schedules. This is a result of the targeted personal income tax relief changes. You should download the updated tax tables or contact your payroll software provider for the update. If extra tax was withheld from employees before the rate change, they will be credited when they lodge their 2016–17 income tax return.