ENTERING A NEW FINANCIAL YEAR will mean that your tax return will need to be submitted. However, in view of the recent tax reviews it may pay to wait a couple of weeks as the proposed changes, if they are passed, will be in your favour.
Currently, some interesting tax cuts have been approved by the Lower House and are currently being reviewed by the Upper House. If the Coalition’s controversial $158 billion tax cuts package passes — and it seems increasingly likely it will today — it will impact around 10 million working Australians.
WHO GETS THEM AND WHAT DOES THAT MEAN TO YOU?
More than 10 million workers will receive a tax offset to some degree, while around 4.5 million will score the full lump sum.
Under the package, all low-and-middle income earners making less than $126,000 a year will qualify.
HOW MUCH WILL YOU GET?
Under the government’s proposal, a low-and-middle income earner tax offset will be doubled for the 2018/19 and 2019/20 financial years.
It means singles can get up to $1080, while dual-income households could net up to $2160 per year. Once they have been passed through the Upper House these tax cuts will arrive over the coming months.
HOW DO I GET IT?
It will show up automatically in your accounts — meaning you won’t need to do anything to claim it. However, if you have already lodged your tax return it may take a couple of months before you get your tax offset.
WHAT’S THE HOLD UP?
The Coalition’s tax package comes in three stages.
The first stage is a cash refund of up to $1080 after individual taxpayers file their tax return.
The second stage, aimed at fighting “bracket creep”, would raise the top limit of the 19 per cent tax bracket from $41,000 to $45,000 from 2022/23, while the low-income offset would also be increased from $645 to $700.
Stage three involves dropping the 32.5 per cent tax rate to 30 per cent from July 1, 2024 — meaning all workers earning between $45,000 and $200,000 would be on the 30 per cent rate.
The Coalition claims that the package would mean an Aussie with an average taxable income of around $60,000 would be more than $15,000 better off over a decade.
But while Labor supports the first two stages — and wants the second stage to be brought forward — it does not support the third, arguing the rollout date is too far off for the parliament to decide on now.
The Coalition doesn’t have the numbers to get it across the line themselves in the Senate, which has forced the Morrison government to negotiate with crossbench senators, including Jacquie Lambie and two from the Centre Alliance. We believe this has happened today, so look out for any positive changes.