More than four million Australians are about to get a thousand dollars back in their pocket, with the Government’s tax cuts set to pass the Senate.
The Federal Government has secured the cross bench support needed to pass the 3-Stage $158billion income tax cut initiative.
What this means is most Australians can receive up to $1080 in tax refunds this year, with more lump sums to come in the next 3 years.
How do you receive your tax cut?
All you need to do is put in your tax return. It’s as simple as that.
Who receives the tax cuts?
The cuts are targeted to low and middle wage earners.
More Good News
Eligible Australians will receive more lump sum payments over the next 3 financial years, up to and including the 2021/22 financial year.
The tax relief is being delivered in the form of lump sum payments, not changes in tax brackets.
The permanent changes to the tax brackets come from July 1, 2022.
BIGGER TAX BRACKET CHANGES
In mid-2022 the Brackets will change.
The cut-off for the 19% tax bracket will increase from $37,000 to $45,000.
While the 32.5% tax bracket will rise from $90,000 to $120,000.
As a result, people will start seeing more money in their regular pay packets.
Then from July 1, 2024 the 32.5% tax bracket will be lowered to 30%. From this point anyone earning between $45,000 and $200,000 will pay tax at 30%.
A massive 94% of Australian taxpayers will be covered by this 30% marginal tax rate once these changes have been introduced.
How the Plan was passed
With the Liberals holding 35 out of the 76 Senate seats, it needed the support of at least 4 of the 6 cross bench to pass legislation opposed by the Labour Party and the Greens.
With that support of the Centre Alliance and Jacqui Lambie, this need was met and the legislation passed.
It is worth noting that the Labour party supported the first 2 stages of the proposal, while both they, the Centre Alliance and Jacqui Lambie expressed concerns that the 3rd Stage Tax Cuts would come at the expense of the budget and essential services. Warning that public spending should not be cut to make ends meet.
When is the best time to get your tax cut?
With around 4.5 million Australians set to net $1080 of tax relief, the Australian Tax Office has recommended tax payers to wait until around August to lodge, because it gives employers a chance to finalise their employees’ income statements and reduces waiting times.
A sign of Australians’ interest in getting their $1080 cut, the ATO was swamped with 90,000 calls in a single day. A sign Australians might be unwilling to wait as the ATO recommends until August to lodge.
Since the election Australia we have seen a myriad of changes:
- Interest rates went down (Not all banks pass along the full cut)
- The First-Home Buyer scheme was proposed
- APRA loosened lending restrictions, increasing borrowing capacity markedly
- Interest Rates went down again (Once again, not all banks pass along the full cut!)
- Property prices have started to move up again in Melbourne and Sydney
With these changes, there is compelling case to check your finances to see if you are getting the best possible rate.
But where to start? We can help you weigh it all up.
As time marches on, situations change. Perhaps you’ve changed jobs? Or there’s a new addition to the family? Maybe you would just like a better rate? Maybe it’s the advent of school fees, or perhaps the kids have flown the coop? Or maybe that leaking shower or tired kitchen has just reached the end of its life.