Federal Budget Summarised

Resident rates and threshold for 2024-25

Good news, the labour government has stuck to their promise by keeping the legalised tax cut in the federal budget! The personal income tax cuts are scheduled to begin on July 1, 2024. Here are some of the highlights…

• Reducing the marginal tax rate from 32.5% to 30% for a single tax bracket spanning from $45,000 to $200,000. This adjustment aims to bring the middle tax bracket more in line with corporate tax rates.
• Additionally, the 37% tax bracket will be completely eliminated starting from July 1, 2024.
• Consequently, there will be only three personal income tax rates: 19%, 30%, and 45%.
• As a result of these modifications, it is estimated that approximately 94% of Australian taxpayers will face a marginal tax rate of 30% or less if they earn between $45,000 and $200,000.

 

Low income tax offsets

The low and middle income tax offset (LMITO) was not extended beyond the 2021-22 income year in the 2023-24 Budget. As a result, it has now ended and been fully replaced by the low-income tax offset (LITO). The Budget did not announce any continuation of the LMITO, so it remains in effect only until the end of the 2021-22 income year. This means that individuals with low-to-middle incomes may experience reduced tax refunds starting from July 2023, ranging from $675 to $1,500, depending on their income (up to $90,000 but phasing out up to $126,000).

 

Feel free to reach out to us for help, regarding any of your taxation needs!