Understanding the New Tax Cuts
Whether you’re an employee, a small business owner or self-employed, it’s essential to understand the practical implications of the Australian Government’s tax cuts, which took effect on 1 July 2024.
Here’s a closer look at what these changes mean and how they could impact your financial planning.
Recap: key tax cut changes
To refresh from our previous article ‘Upcoming Tax Cuts for Australians,’ the Government’s tax cuts involve:
- Lowering the 19% tax rate to 16% for incomes between $18,201 and $45,000
- Lowering the 32.5% tax rate to 30% for incomes over $45,000
- Increasing the threshold for the 37% tax rate from $120,000 to $135,000
- Increasing the threshold for the 45% tax rate from $180,000 to $190,000
These adjustments are designed to ensure that every Australian taxpayer benefits, with changes either reflected in your take-home pay or your tax return for the 2024 – 25 financial year.
How will these changes impact you?
- Employees
Your employer will apply the new rates through updated PAYG withholding, meaning you’ll see the benefits in your take-home pay each payday. - Self-employed or small business owners
The savings will be evident when you file your 2024 – 25 tax return, offering potential opportunities to reinvest in your business or save for other priorities. - Higher-income earners
The increased thresholds for higher tax brackets may reduce the impact of higher marginal tax rates, especially for those earning between $120,000 and $190,000.
To check that these changes have been applied, check your payslip to confirm your employer is using the updated tax tables or if you’re self-employed, ensure your financial records reflect the new rates and thresholds.
For further guidance on how these changes could impact you, please contact Simmons Livingstone on 1800 618 800 or via email at admin@simmonslivingstone.com.au.
