How does the Budget impact individuals?

Here are some of the measures that have come out of the Budget and how they impact individuals.

 

 

Low and middle-income earners – tax cuts

  • Bringing forward personal income tax cuts that have already been legislated for. Such cuts are a substitute for wage increases. The tax reduction increases the available cash in the hand of the household.
  • This tax cut is a deduction against tax payable reducing the tax that is payable. It is available only to those that have taxable income and file tax returns and will not be refundable.
  • With the filing of the 2018-19 tax return, single income families earning up to $126,000 will receive an immediate tax reduction of $1,080. For dual income families, this reduction will be $2,080. These cuts immediately increase available cash to the household. Over 4.5m personal taxpayers will enjoy the full benefit and another 5.5m will enjoy a progressively lower benefit.
  • From 1 July 2024, for those earning between $45,000 – $200,000, the tax rate of 32.5% is reduced to 30%. This will mean that from that date, 94% of personal taxpayers will be on a tax rate of no more than 30%.
  • From 2023-24 there will be four tax rates for all personal taxpayers:
Taxable income Tax rate
Up to $18,200 Nil
$18,201 – $45,000 19%
$45,001 – $200,000 30%
$200,001 + 45%
  •  By 2024-25, 60% of all personal income tax will be paid by the top 20% of taxpayers.

 

Tables:
The effect of these changes are shown in the tables below taken from the Budget papers.

Table A: Tax break

Dual income couple, equal income split ($)

Taxable income

Spouse1

Taxable income

Spouse2

Household taxable income Current tax liability 2018-19 tax relief 2022-23 tax relief 2024-25 tax relief
30,000 30,000 60,000 4,794 510 510 510
60,000 60,000 120,000 24,294 2,160 2,160 2,910
90,000 90,000 180,000 45,464 2,430 2,430 4,680
120,000 120,000 240,000 68,864 630 5,130 8,880
200,000 200,000 400,000 134,464 270 5,130 23,280

 

Single person household ($)

 

Taxable income Current tax liability 2018-19 tax relief 2022-23 tax relief 2024-25 tax relief
30,000 2,397 255 255 255
60,000 12,147 1,080 1,080 1,455
90,000 22,732 1,215 1,215 2,340
120,000 34,432 315 2,565 4,440
200,000 67,232 135 2,565 11,640

 

Table B: Tax rates from 2024/2025

 

Income tax rates by income range ($)

 

Rate Current From 2024-25 New thresholds

in 2024-25

Tax free 0 – 18,200 Tax free Up to $18,200
19.0% 18,201 – 37,000 19.0% 18,201 – 45,000
32.5% 37,001 – 87,000 30.0% 45,001 – 200,000
37.0%     87,001 – 180,000
45.0% > 180,000 45.0% > 200,000
Income tax offsets ($per year, per person)
Low income Up to 445 Up to 70

 

Table C: Proportion of taxpayers in each tax bracket, 2017-18

Source: Australian Financial Review, 3 April 2019

 

Energy Assistance Payment to pensioners and those receiving support payments

  •  Before 30 June 2019, a one-off cash payment may be offered to pensioners and those receiving support payments to assist with the payment of energy accounts. Payments are to be $75 for singles and $125 for couples.

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