The Government’s proposed tax changes have now passed parliament. This means that if you have taxable income below $125,333 and you pay tax, you will receive some benefit from the new Low and Middle Income Tax Offset in your 2019 Tax Return. The offset is non-refundable which means that if you are not taxable, you don’t receive any benefit.
The following low and middle income tax offset may apply to you from the 2019 Financial Year through to the 2022 Financial Year:
The remaining tax cuts that were passed don’t apply until at least the 2023 Financial Year. In 2023 the new tax offset will be removed and replaced with a permanent lowering of the tax thresholds to provide a similar result to what the offset achieved for those on lower incomes. The final step of the plan is that in the 2025 Financial Year a further cut applies to people earning over $45,000 through the reduction of the 32.5% and 37% tax brackets to 30%. This would provide a significant tax cut for people earning higher incomes. However, while the cuts have passed into law, there is another election to be held before the tax cuts commence which could mean the last two stages of the tax cuts never happen.