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Treasurer unveils tax cuts for millions of Aussies
Ten million Aussies are hundreds of dollars richer following the now announced extension of the low and middle income tax offset.
Treasurer unveils tax cuts for millions of Aussies
Ten million Aussies are hundreds of dollars richer following the now announced extension of the low and middle income tax offset.
Low- and middle-income earners no longer face a tax rise following the announced extension of the low and middle income tax offset (LMITO).
“To secure Australia’s recovery, the budget provides an additional tax cut to more than 10 million low- and middle-income earners,” Treasurer Josh Frydenberg said on Tuesday evening.
Under the extension, the LMITO – a one-off tax offset worth $1,080 to those earning from $48,000 to $90,000 – will be temporarily retained for the entirety of 2021-22 financial year, costing the budget around $7.8 billion.
By extending the LMITO, the Treasurer has put to rest allegations that the government was preparing to pull forward the next stage of its tax plan – stage three.
Namely, while stage three tax cuts aren’t supposed to commence until 1 July 2024, pundits did speculate that the government could in fact bring them forward to unburden business.
The stage three tax cuts are the largest and most controversial reform to the current system, with all Australian workers earning between $45,000 and $200,000 set to receive the same flat 30 per cent tax rate.
Contrary to this year, last year it was clear that the tax cuts were at the top of the government’s agenda heading into the October budget.
In fact, well in advance of budget Tuesday, Australians knew the government would bring forward the personal income tax cuts from their initial 2022 start date and retain the LMITO, temporarily.
However, the Treasurer’s current tax plan was only revealed on Tuesday evening in Canberra.
In a statement issued earlier this week, Mark Chapman, director of tax communications at the H&R Block, said that the government possibly didn’t notice the LMITO was set to expire on 1 July.
“Either way, the day of reckoning is fast approaching, so the government needs to take action to prevent this highly damaging tax rise by extending the availability of the offset through until 1 July 2024,” Mr Chapman said.
If the government really wants to boost the economy, Mr Chapman noted that it could do so by a combination of targeted tax cuts for those earning less than $90,000 and an increase in the JobSeeker payment, both of which, he noted, would be spent rather than saved.
“The 2020-21 tax cuts are often compared (by the government) with the figures for 2017-18. This is pure smoke and mirrors since it ignores the low and middle income tax offset (introduced in 2018-19) and hence maximises the apparent size of the tax cuts. If the low and middle income tax offset was included, the tax cuts (at least to the extent that they apply to low- and middle-income earners) would be far less dramatic,” he said pre-budget.
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