Parliament has passed the Government’s Personal Income Tax plan. This means that the first stage of the proposed personal income tax cuts will start to take effect from 1 July 2018.
According to the Prime Minister, taxes “will now be lower, fairer and simpler”.
The Government’s personal income tax cuts has three steps:
1.The Government will introduce the Low and Middle Income Tax Offset (in addition to the Low Income Tax Offset) from 1 July 2018. This is a non-refundable tax offset of up to $530pa. As such the offset applies to Australian resident low and middle income earners. This equates to around 10 million taxpayers being eligible to get at least some tax relief from this new offset. The offset is available for the 2019-2022 income tax years and will be received as a lump sum on assessment. It will be calculated after an individual lodges their tax return.
You can use our online calculator here to see if you might be eligible.
2.Lifting tax brackets, to protect Australians from the impact of ‘bracket creep’:
– From 1 July 2018, the top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000.
– From 1 July 2022, the 19% personal income tax bracket will increase from
$37,000 to $41,000, and the top threshold of the 32.5% personal income tax bracket will further increase from $90,000 to $120,000. The low income tax offset will also be lifted to $645.
3.The 37% tax bracket will be removed entirely from 1 July 2024. The top threshold of the 32.5% personal income tax bracket will be increased from $120,000 to $200,000.
The tax offset will be calculate automatically when you submit your tax return – if you would like any more advice please contact us here.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
Source: National Tax & Accountants’ Association Ltd