Save
What the tax breaks in the budget actually mean for your savings
The government’s plans to flatten the tax brackets may not have the intended outcome for taxpayers and the economy, according to one tax expert.
What the tax breaks in the budget actually mean for your savings
The government’s plans to flatten the tax brackets may not have the intended outcome for taxpayers and the economy, according to one tax expert.
From 2024–25, the government has proposed just three marginal tax rates above the tax-free threshold: 19 per cent for those earning between $18,201 and $45,000; 30 per cent for incomes up to $200,000; and 45 per cent as the highest rate for incomes above $200,001.
While the government has already legislated to remove the 37 per cent tax bracket, the plan will see the current 32.5 per cent rate be pushed down to 30 per cent, and the top income threshold raised from $180,000 to $200,000.
Treasurer Josh Frydenberg said that the changes will mean 94 per cent of taxpayers will face a tax rate of 30 per cent or less.
Speaking to Nest Egg’s sister publication, Accountants Daily, the Tax Institute’s senior tax counsel, Professor Robert Deutsch, said that while at face value it would seem that someone on a $45,000 income would be paying the same rate of tax as a taxpayer on $200,000, it would in fact be about eight times less.
“If you look at the marginal rates and feed them into the calculation, on the Coalition’s projected tax rates, someone on $200,000 will pay almost eight times more in income tax than someone on $50,000.
“When someone on four times more income pays eight times more tax, you indeed have a progressive tax system.”
He added: “I quite like the simplicity of that and it makes it a bit more straightforward.
“What I do like about that is that it gives people a better incentive to earn more income up to that $200,000 level.
“Economists will argue whether that incentive is real or just perceived, but I think it is good thing that somebody earning $60,000 or $70,000 and gets a 10 per cent pay rise doesn’t slip into a higher tax bracket.”
BDO national tax director Lance Cunningham said that while the plan looked good upfront, it would be a considerably long time before taxpayers would enjoy the flatter tax rates, especially in the current political and economic climate.
“It’s not until 2024, so it’s a bit on the never never — if you wait long enough, you might get something out of this,” Mr Cunningham said.
Tax saving
Sustainable tax conditions only way forward: OECD
The Australian economy had been on a 28-year winning streak of uninterrupted growth before the pandemic. However, despite a return to lockdowns, the OECD has predicted that winning ways can return sh...Read more
Tax saving
ATO issues warning over new gift card scam
The Australian Taxation Office (ATO) is warning victims of a new phone scam, where scammers are pretending to be the tax man and demanding payments for unpaid tax liabilities. ...Read more
Tax saving
EV uptake set to stall following tax changes
Special EV taxes introduced by state governments are creating a disincentive for Aussies to choose cleaner vehicles and slowing Australia’s overall transition to net zero, new data has revealed. ...Read more
Tax saving
Rooftop solar avoids ‘sun tax’ but still faces caps
Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts ...Read more
Tax saving
South Australians now eligible for COVID-19 Disaster Payment
South Australians under lockdown are set to be supported by the COVID-19 Disaster Payment, the state government has confirmed. ...Read more
Tax saving
Broken tax system costs economy $50bn
Australia’s tax laws are costing the nation about $50 billion in compliance costs, while inefficient taxes are slowing down economic growth, an industry expert has warned. ...Read more
Tax saving
Australia signs on for global trade floor
Australia is set to gain up to $3 billion in additional tax revenue after agreeing with world leaders to sign on to new rules as to where profits for multinationals should be taxed as well as a new mi...Read more
Tax saving
Aussies warned of overconfidence ahead of EOFY
Two-thirds of Australians are confident about grappling with the tax implications of the pandemic. Maybe too confident. ...Read more
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
The sea and tree-change norm; Square’s acquisition of Afterpay; Why you should think twice before turning to TikTok for advice
Listen now
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Tax saving
Sustainable tax conditions only way forward: OECD
The Australian economy had been on a 28-year winning streak of uninterrupted growth before the pandemic. However, despite a return to lockdowns, the OECD has predicted that winning ways can return sh...Read more
Tax saving
ATO issues warning over new gift card scam
The Australian Taxation Office (ATO) is warning victims of a new phone scam, where scammers are pretending to be the tax man and demanding payments for unpaid tax liabilities. ...Read more
Tax saving
EV uptake set to stall following tax changes
Special EV taxes introduced by state governments are creating a disincentive for Aussies to choose cleaner vehicles and slowing Australia’s overall transition to net zero, new data has revealed. ...Read more
Tax saving
Rooftop solar avoids ‘sun tax’ but still faces caps
Power companies will soon be able to charge Australians with rooftop solar panels a tax for exporting electricity to the grid, albeit the regulators have walked back from the most controversial parts ...Read more
Tax saving
South Australians now eligible for COVID-19 Disaster Payment
South Australians under lockdown are set to be supported by the COVID-19 Disaster Payment, the state government has confirmed. ...Read more
Tax saving
Broken tax system costs economy $50bn
Australia’s tax laws are costing the nation about $50 billion in compliance costs, while inefficient taxes are slowing down economic growth, an industry expert has warned. ...Read more
Tax saving
Australia signs on for global trade floor
Australia is set to gain up to $3 billion in additional tax revenue after agreeing with world leaders to sign on to new rules as to where profits for multinationals should be taxed as well as a new mi...Read more
Tax saving
Aussies warned of overconfidence ahead of EOFY
Two-thirds of Australians are confident about grappling with the tax implications of the pandemic. Maybe too confident. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
