Tax changes?
With the election done and dusted and the government returned, they have set about getting their changes to the Personal Income Tax Plan passed.
These changes have now become law, but what does it mean for you?
In summary, there is a little in it for everyone with changes to the thresholds, the rates and also to rebates.
The tax cuts and benefits are being undertaken in stages: –
Stage 1 – from 1 July 2018
Increase the top income threshold of the 32.5% tax bracket from $87,000 to $90,000.
Increase the low and middle income tax offset (LMITO) from a maximum amount of $530 to $1,080 per annum.
A tax offset for people earning low and middle incomes will be doubled for the 2018/2019 & 2019/2020 financial years
- Those earning up to $37,000 will receive up to $255
- Those earning between $37,000 and $47,999 will receive payments increasing incrementally up to $1,080
- Those earning between $48,000 and $90,000 will get the lump sum of $1,080;
- Those earning between $90,001 and $126,000 will receive payments decreasing incrementally to $0.
These payments will arrive in your end-of-year tax returns. If you have already lodged your return, the ATO will make the necessary changes to ensure that you receive the correct tax offset.
Stage 2 – from 1 July 2022
Increase the top income threshold of the 19% tax bracket from $37,000 to $45,000.
Replace the low and middle income tax offset introduced in stage one with a new Increase the low income tax offset (LITO) which caps out at $700 at
Stage 3 – from 1 July 2024
The 32.5% marginal rate will reduce to 30% for a resident individual.
Increase the top income threshold of the new 30% tax bracket to $200,000.
Please see below, tables summarising the new thresholds and rates.
Stage 1: Thresholds, rates and tax payable from 1 July 2019
|
Income thresholds |
Rate |
Tax payable on this income |
| $0 – $18,200 |
0% |
Nil |
| $18,201 – $37,000 |
19% |
19c for each $1 over $18,200 |
| $37,001 – $90,000 |
32.5% |
$3,572 plus 32.5% of amounts over $37,000 |
| $90,001 – $180,000 |
37% |
$20,797 plus 37% of amounts over $90,000 |
| $180,001 and over |
45% |
$54,096 plus 45% of amounts over $180,000 |
| LMITO |
|
Up to $1,080 |
Stage 2: Thresholds, rates and tax payable from 1 July 2022
|
Income thresholds |
Rate |
Tax payable on this income |
| $0 – $18,200 |
0% |
Nil |
| $18,201 – $45,000 |
19% |
19c for each $1 over $18,200 |
| $45,001 – $120,000 |
32.5% |
$5,092 plus 32.5% of amounts over $45,000 |
| $120,001 – $180,000 |
37% |
$29,467 plus 37% of amounts over $90,000 |
| $180,001 and over |
45% |
$51,667 plus 45% of amounts over $180,000 |
| LITO |
|
Up to $700 |
Stage 3: Thresholds, rates and tax payable from 1 July 2024
|
Income thresholds |
Rate |
Tax payable on this income |
| $0 – $18,200 |
0% |
Nil |
| $18,201 – $45,000 |
19% |
19c for each $1 over $18,200 |
| $45,001 – $200,000 |
30% |
$5,092 plus 30% of amounts over $45,000 |
| $200,000 and over | 45% | $51,592 plus 45% of amounts over $180,000 |
| LITO |
|
Up to $700 |
If you have any queries or any concerns in relation to the above, please contact our office.