In what is likely an election year budget, there were modest tax cuts for all individuals and very few nasty surprises.
From the 2019 Financial Year until the 2022 Financial Year, the Government plans to introduce an additional Low Income Tax Offset of up to $530 to reduce tax payable by individuals with income under $125,333. Below is a table showing how much benefit you may obtain based on your taxable income level:
Also from 1/7/18 the upper level of the 32.5% tax bracket will increase from $87,000 to $90,000. Therefore anyone earning over $90,000 will receive a tax cut of $135.
Seven Year Tax Plan
The Government has also proposed two further measures to occur after 2022. One is to lock in the above tax offset by adjusting the tax thresholds and low income tax offset. The other is to progressively eliminate the 37% tax bracket commencing in the 2023 Financial Year and completing in the 2025 Financial Year. If this were to happen, which doesn't seem likely given it is a couple of elections away, the 32.5% tax bracket which currently applies to individuals earning between $37,000 and $87,000 will instead apply to individuals earning between $41,000 and $200,000. For an individual earning $200,000 per year this would result in a tax cut of $5,625.
Medicare Levy Increase will not proceed
In last years budget the Government proposed to increase the Medicare Levy by 0.5%. This will now not occur.
Pensioner Work Bonus
The amount that can be earned by a pensioner without affecting their pension entitlement will be increased from $250 per fortnight to $300 per fortnight from 1/7/19. The bonus will also be extended to self employed pensioners.
Pensioner Loan Scheme
The pension loan scheme will be extended to allow all pensioners the ability to borrow up to 150% of the age pension rate to supplement their income. This will enable pensioners to access some of the equity in their home (effectively spending the kids inheritance). It should be noted that interest is charged on the loan.