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Budget 2019-2020 - Personal Income Tax Cuts

Budget 2019-2020 - Personal Income Tax Cuts

  • Saturday, 06 April 2019 04:22

As anticipated, the Budget celebrated the surplus with a $19.5 billion package of personal income tax cuts for Australian residents. This package revises the legislated seven-year income tax plan.

The personal tax changes mean a tax saving of $855 for someone on an annual taxable income of $45,000 per annum until 2022, then $1,080 until 2024 onwards.

                                       Tax thresholds

Tax rate

From 1 July 2018

From 1 July 2022

From 1 July 2024

0%

$0 - $18,200

$0 - $18,200

$0 - $18,200

19%

$18,201 - $37,000

$18,201 - $45,000

$18,201 - $45,000

30%

                                                $45,001 - $200,000

32.5%                           $37,001                                       - $90,000

                            $45,001 - $120,000

 

37%

$90,001 - $180,000

$120,001 - $180,000

-

45%

>$180,000

>$180,000

>$200,000

LMITO                            Up to $1,080

 

LITO

Up to $445

Up to $700

Up to $700

This round of tax cuts:

  • Increases the top threshold of the 19% personal income tax bracket to $45,000 from 1 July 2022.
  • Reduces the 32.5% marginal tax rate to 30% from 1 July 2024-2025.

LOW AND MIDDLE INCOME TAX OFFSET (LMITO) INCREASED. DATE OF EFFECT 2018-2019 UNTIL 2021-2022.

The low and middle income tax offset (LMITO) will increase from a maximum amount of $530 to $1,080 per annum and the base amount will increase from $200 to $255 per annum.

The LMITO will provide a reduction in tax of up to $255 for taxpayers with a taxable income of $37,000 or less. Between taxable incomes of $37,000 and $48,000, the value of the offset will increase at a rate of 7.5 cents per dollar to the maximum offset of $1,080. Taxpayers with taxable incomes between $48,000 and $90,000 will be eligible for the maximum offset of $1,080. From taxable incomes of $90,000 to $126,000 the offset will phase out at a rate of 3 cents per dollar.

The LMITO is received after the individual has lodged their tax return.

LOW INCOME TAX OFFSET (LITO) INCREASED. DATE OF EFFECT 1 JULY 2022.

From 1 July 2022, the Government will increase the low income tax offset (LITO) from $645 as legislated, to $700. The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000, instead of at 6.5 cents per dollar between taxable incomes of $37,000 and $41,000 as previously legislated under the plan. LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

MEDICARE LEVY THRESHOLDS INCREASED. DATE OF EFFECT 2018-2019.

The Medicare levy low income thresholds for singles, families, and seniors and pensioners will increase from the 2018-2019 income year.

Thresholds

Current

Proposed

Singles

$21,980

$22,398

Family

$37,089

$37,794

Single seniors and pensioners

$34,758

$35,418

Family seniors and pensioners

$48,385

$49,304

Dependent child or student

$3,406

$3,471

 

 

 

 

 

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