The decision is in, and so is a Coalition government. So what exactly does this mean for you and your money?
The Liberal Party is set to deliver a simplified tax system and rolling cuts across the various wage brackets. In a nutshell, here’s what we’ve been promised…
- Tax cuts will be provided for more than 10 million Australians;
- From July 2022, the Coalition will raise the 19 per cent tax bracket from $37,000 to $45,000;
- From July 2024, the 32.5 per cent rate will be reduced to 30 per cent, and the 37 per cent tax bracket will be entirely abolished. This will make a flat 30 per cent tax rate for anyone earning between $45,000 and $200,000;
- Someone earning $200,000 a year will get a tax cut worth $11,640 compared with $1205 for someone earning $50,000 a year.
Low and middle-income earners will feel the immediate benefit of promised tax offsets when they get their tax return this year.
- From July 1, Australians earning less than $37,000 will get a bonus of up to $255 back with their tax returns. If you’re earning between $48,000 and $90,000, you will get $1080. The offset then scales down to nothing for those earning $126,000 or more.
- The government introduced a $500 million First Home Loan Deposit Scheme for first homebuyers to help them get a foot in the door;
- This will give 10,000 first homebuyers the opportunity to buy a home with only a five per cent deposit, as opposed the usual 20 per cent, with the Government to guarantee the shortfall. This will effectively remove the need for lender’s mortgage insurance;
- To be eligible, a person needs to have saved at least the first 5 per cent deposit, and have an income less than $125,000 for an individual or $200,000 for a couple;
- Note that strict borrowing criteria still apply.
Instant Asset Write-Off
- Previously, businesses turning over more than $10 million were excluded from this scheme. Now, businesses turning over up to $50 million can write-off assets against their taxable income;
- The threshold for each asset has increased to $30,000;
- The initiative has been extended to 30 June 2020.
SME Tax Cuts
- The tax rate for small and medium-sized enterprises (SME’s) with less than $50 million annual turnover was scheduled to drop to 25 per cent by July 2026, but these tax cuts will now be effective from 1 July 2021.
It is worth noting that although we know the Coalition will form Government, we don’t yet know when Parliament will resume, or how quick the legislative process will be to formalise some of these proposals. We also don’t yet know what negotiation (if any) will be required to successfully pass them through the Senate.
If you’d like to talk to us about how these changes may affect you, simply call us on 9887 8751 or email us for an appointment.