Parliament passes Personal Tax Cuts

The Federal Government has introduced its complete package of individual tax cuts to begin the 2019- 2020 Financial Year, delivering on one of Scott Morrison’s re-election centrepieces and plan to keep the Australian economy on track.

On 4 July 2019, the Treasury Laws Amendment Bill 2019 passed all stages of Parliament without amendment, followed by Royal Assent as Act No 52 of 2019 the following day. As a result, the Bill fully implements the personal tax cuts measures announced by the Liberal Party of Australia during this year’s 2019-20 Federal Budget.

As a result of the new Personal Tax Cuts, millions of Australian taxpayers will receive between $255 and $1,080 in tax cuts for the 2018-19 financial year. The tax cuts will appear automatically in their bank accounts as part of their refund after they lodge their 2018-19 tax return.

The Australian Taxation Office (ATO) have already begun processing 2018–19 tax returns; therefore, eligible taxpayers can expect to see the additional credits from 16 July 2019.

We’ve included a summary from the ATO on the Personal Tax Cuts introduced below. If you’d like to understand more or need assistance with your tax return, book an appointment with our friendly Tax Services team.

Tax Cuts in Detail

From the 2018–19 income year, Personal Income Tax changes will result:

  • Increase to low and middle income tax offset from a maximum amount of $530 to $1,080 per annum and increase the base amount from $200 to $255 per annum
  • Taxpayers with a taxable income that does not exceed $37,000 will receive a low and middle income tax offset of up to $255
  • Taxpayers with a taxable income that exceeds $37,000 but is not more than $48,000 will receive $255, plus an amount equal to 7.5 per cent to the maximum offset of $1,080
  • Taxpayers with a taxable income that exceeds $48,000 but is not more than $90,000 will be eligible for the maximum low and middle income tax offset of $1,080
  • Taxpayers with a taxable income that exceeds $90,000 but is not more than $126,000 will be eligible for a low and middle income tax offset of $1,080, less an amount equal to 3 per cent of the excess.

From the 2022–23 income year:

  • The top threshold of the 19 per cent personal income tax bracket will increase from $41,000 to $45,000 such that the rate of tax on the amount of the taxable income of a resident individual that:
    • Exceeds $18,200 but is not more than $45,000 is 19 per cent
    • Exceeds $45,000 but is not more than $120,000 is 32.5 per cent
    • Exceeds $120,000 but is not more than $180,000 is 37 per cent
    • Exceeds $180,000 is 45 per cent
  • Increase the low income tax offset (LITO) from a maximum amount of $645 to $700 per annum
  • Taxpayers with a taxable income that does not exceed $37,500 will receive a LITO of $700
  • Taxpayers with a taxable income that exceeds $37,500 but is not more than $45,000 will receive a LITO of $700, less an amount equal to 5 per cent of the excess
  • Taxpayers with a taxable income that exceeds $45,000 but is not more than $66,667 will receive a LITO of $325, less an amount equal to 1.5 per cent of the excess.

From the 2024–25 income year:

  • The 32.5 per cent marginal tax rate will reduce to 30 per cent such that for a resident individual the rate of tax on the amount of their taxable income that:
    • Exceeds $18,200 but is not more than $45,000 is 19 per cent
    • Exceeds $45,000 but is not more than $200,000 is 30 per cent
    • Exceeds $200,000 is 45 per cent.