1 July 2018 was the start date for the seven-year income tax plan announced in the recent 2018-19 Federal Budget. This 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.
The top threshold of the 32.5% personal income tax bracket has now increased from $87,000 to $90,000, providing a tax cut of up to $135 a year to 3 million people (and preventing about 200,000 people from facing a marginal tax rate of 37%).
The Low and Middle Income Tax Offset has also been introduced. This offset is a non-refundable lump sum annual tax reduction that you receive when you lodge your income tax return.
So what tax relief can you expect? Someone earning:
- $22,000 a year will pay $200 less tax
- $40,000 a year will pay $290 less tax
- $50,000 a year will pay $530 less tax
- $80,000 a year will pay $530 less tax
- $90,000 a year will pay $665 less tax
- $120,000 a year will pay $215 less tax
- $160,000 a year will pay $135 less tax
- $200,000 a year will pay $135 less tax
Further changes are planned from 1 July 2022, culminating in the removal of the 37% tax bracket from 1 July 2024. These changes will allow you to earn more before facing a higher tax bracket.
To find out more about how these tax changes will affect you, call us on 9887 8751 or email us for an appointment.