News

2019 Tax cuts – How much will you benefit?

The Government’s tax cut bill for 2019 passed through Parliament on Thursday night, July 4th, with  assistance from Labor and the Senate cross-bench. This bill is the Coalition’s three-part plan for tax cuts spanning across the 2018-19, 2022-23 and 2024-25 income years.

These tax cuts will come through as a tax offset: only those who have paid or are paying tax will be eligible. You don’t need to claim the offsets, the ATO will automatically apply them to your tax assessment.

For the 2018-19-income year;

The low and middle-income tax offset (LMITO) maximum increased to $1,080 per annum, and the base amount to $255 per annum.

The low and middle-income tax offset (LMITO) does not replace the low-income tax offset (LITO): those eligible for LITO can add this offset amount to their LMITO.

Income <$37,000 $37,000-$48,000 $48,000-$90,000 $90,000-$126,000
Low- and middle-Income tax offset $255 $255 – $1,080 $1,080 $1,080-$0
        • Tax offset for the $37,000-$48,000 income bracket can be calculated using: $255 + {(Annual income – $48,000) * 7.5%}
        • Tax offset for the $90,000-$126,000 income bracket can be calculated using: $1080 – {(Annual income – $90,000) * 3%}

For the 2022-23-income year;

The low-income tax offset (LITO) maximum will increase to $700 per annum

Income <$37,500 $37,500-$45,000 $45,000-$66,667
Low-Income tax offset $700 $700-$325 $325-$0
        • Tax offset for the $37,500-$45,000 income bracket can be calculated using: $700 – {(Annual income – $37,500) * 5%}
        • Tax offset reduction for the $45,500-$66,667 income bracket can be calculated using: $325 – {(Annual income – $45,000) * 1.5%}

For the 2024-25-income year;

The $45,000-$200,000 income bracket marginal tax rate will reduce to 30%

Income $18,200-$45,000 $45,000-$200,000 >$200,000
Rate of tax 19% 30% 45%