The much-anticipated federal budget was announced by treasurer Josh Frydenberg bringing in benefits and relief to both citizens of Australia and migrants to the country mainly aimed at bringing Australia out of the Covid pandemic and the detrimental impact it had on the economy as a whole. Under the coalition government tax cut plan lower- and middle-income earners will receive greater relief. As for individuals the announced budget brought forward the proposed legislated changes to the individual tax rates which were to be implemented from 1 July 2022 to 1 July 2020. Furthermore, the individual tax offsets will be restructured with the legislated increase to the Low Income (LITO) tax off set. Changes to the income tax rates include.
- Raising the 19% income tax bracket from $37,000 to $45,000
- Raising the 32.5% income tax bracket from $90,000 to $120,000
Individual tax rates effective from 01/07/2020
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The changes to the individual tax rates will be effective up until 30/06/2024 putting money to the people’s pockets increasing their disposable income to entice people to spend more to revive the economy.
Income Tax Offsets.
From 1 July 2020 the lower income tax offset will be increased from $445 to $700. Taxpayers who have income levels below $ 37,500 will be entitled to the full off set amount. Above the $ 37,500 the lower income tax offset is reduced at two levels,
- $37,500 and $ 45,000 will be reduced at 5 cents per dollar
- $45,000 and $ 66,667 will be reduced at 1.5 cents per dollar
Furthermore, the current Low and Middle-Income tax offset (LMITO) of $1,080 will continue until the 2021 income year.