Tax cuts become law
The Government has announced that more than 10 million Australians will receive immediate tax relief following the passage of legislation through the Parliament, which increases the top threshold for the 19% tax rate from $41,000 to $45,000 and increases the low income tax offset from $645 to $700 in 2022/23.
In combination with the legislated removal of the 37% tax bracket in 2024/25, the Government is also "delivering structural reform to the tax system" by reducing the 32.5% tax rate to 30%.
Low and middle income tax offset also now law
In addition, from the 2018/19 income year (i.e., last income year):
- The low and middle income tax offset ('LAMITO') has been increased from a maximum amount of $530 to $1,080 per annum and the base amount increased from $200 to $255 per annum; and
- Taxpayers with a taxable income:
— of $37,000 or below can now receive a LAMITO of up to $255;
— above $37,000 and below $48,001 can now receive $255, plus an amount equal to 7.5% to the maximum offset of $1,080;
— above $48,000 and below $90,001 are now eligible for the maximum LAMITO of $1,080; and
— above $90,000 but is no more than $126,000 are now eligible for a LAMITO of $1,080, less an amount equal to 3% of the excess.
The ATO is implementing the necessary system changes so taxpayers that have already lodged their 2018/19 tax return will receive any increase to the LAMITO they are entitled to (any tax refund should be deposited in the taxpayer's nominated bank account). There will not be any need to request an amendment.
Those who are yet to lodge their tax return will have any offset they are entitled to taken into account during the normal processing of their return.
The Money Edge | Bundaberg