Who gets a tax cut from 1 July?
Treasurer Scott Morrison announced a raft of tax cuts for individuals as part of the May Budget, so what will happen from 1 July?
The seven-year income tax plan announced in the recent 2018-19 Federal Budget will start from 1 July 2018.
The seven-year plan benefits low and middle-income earners in the first few years before expanding out to a broader restructure of the tax rates and brackets for everyone.
From 2018-19, the top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000.
Dovetailing into the tax bracket change is the introduction of the Low and Middle-Income Tax Offset for those with taxable incomes up to $125,333. The offset is a non-refundable tax offset that you receive when you lodge your income tax return.
If your annual taxable income is $80,000 in 2018-19, then the personal income tax changes provide an annual tax reduction of $530 per year. If your annual taxable income is $120,000, then the changes give you an annual reduction of $215.
Further changes are planned from 1 July 2022 culminating in the removal of the 37% tax bracket from 1 July 2024, though as yet this hasn't passed through the Sentate. The changes will allow you to earn more before facing a higher tax bracket.
To better understand the implications for you and your tax return, contact us on 02 9957 4033.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.