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New Tax Relief Introduction – Parliamentary Bill 2019

The Australian Government’s new personal income tax cuts were passed in Parliament on 4 July 2019. Moderately reduced tax offsets are benefiting many employees immediately in their 2019 financial year tax returns.

Changes for the 30 June 2019, 30 June 2020, 30 June 2021 and 30 June 2022 year

                Low and Middle Income Tax Offsets

Taxpayers may be eligible for the Low and Middle Income Tax Offset if their taxable income is less than $126,000 and if they are an Australian resident for income tax purposes and their taxable income is within the ranges below:

  If your relevant income:   The amount of your tax offset is:
  does not exceed $37,000   $255
  exceeds $37,000 but is not more than $48,000   $255, plus an amount equal to 7.5% of the excess
  exceeds $48,000 but is not more than $90,000   $1,080
  exceeds $90,000 but is not more than $126,000   $1,080, less an amount equal to 3% of the excess

The offset can only reduce the amount of tax payable by taxpayers to zero and will not reduce the Medicare Levy.

The current rates for the Low Income Tax Offset is in addition to the Low and Middle Income Tax Offset.

Changes for the 30 June 2023 and 30 June 2024 years

               
  1. Low Income Tax Offset 
Taxpayers may be eligible for the Low Income Tax Offset if their taxable income is less than $66,667.

  If your relevant income:   The amount of your tax offset is:
  does not exceed $37,000   $700
  exceeds $37,500 but is not more than $45,000   $700, less an amount equal to 5% of the excess
  exceeds $45,000 but is not more than $66,667   $325, less an amount equal to 1.5% of the excess

  1. Income Tax Rates
Those workers earning more than $120,000 will benefit in four years’ time when a second phase of changes to personal income tax will come in to effect. By financial year 2023, with a shift in income tax brackets, if your income is greater than $120,000, then you may receive more than $2500 in your annual tax return.

The following table reflects changes in the tax rates for individuals for the 30 June 2023 and 30 June 2024 years:

  Rate   Current Personal Tax Rates   30 June 2023 to 30 June 2024
  0.0%   $0 to $18,200   $0 to $18,200
  19.0%   $18,201  to $37,000   $18,201  to $45,000
  32.5%   $37,001 to $90,000   $45,001 to $120,000
  37.0%   $90,001 to $180,000   $120,001 to $180,000
  45.0%   $180,001 +   $180,001 +

From financial year 2025

A third phase of income tax changes is proposed to benefit those workers earning significantly more than the average wage.

Changes would include the removal of a tax threshold and a tax rate cut for another threshold, resulting in four tax thresholds – instead of the current five – and the 32.5 per cent tax rate being cut to 30 per cent.

The 19 per cent tax rate would apply up to $45,000 per annum income – instead of up to the current $41,000 per annum income – and those workers earning more than $45,000 would be taxed at 30 per cent after $45,000 up to $200,000.

The following table reflects the new tax rates for individuals for the 30 June 2025 year:

               
  Rate   Proposed 30 June 2025
  0.0%   $0 to $18,200
  19.0%   $18,201  to $45,000
  30.0%   $45,001 to $200,000
  45.0%   $200,001 +

Low income workers and those on Newstart will not benefit from the new Bill.

Employer PAYG Obligations

Keeping up-to-date with your employees’ income tax obligations ensures accurate PAYG withholding tax obligations are met and reported to the ATO.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your PAYG obligations. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

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