As per the promises of the federal budget in April, the Liberal Party is set to charge ahead with the biggest cuts to income tax since the reign of prime minister John Howard and treasurer Peter Costello.The main changes for Australian taxpayers are:
- From this tax time, those earning up to $126,000 per year would get $1,080 back at tax time.
- A promise to flatten tax brackets by 2024, so all taxpayers earning between $45,000 and $200,000 would have their tax rate reduced to 30 per cent.
- From 1 July 2022, the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000.
- From 1 July 2024, the government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000.
- From 1 July 2024, the government will remove the 37 per cent tax bracket completely.
Tax was a key battleground this federal election, and many of Labor’s tax policies attracted substantial opposition.
For the ALP, its plans to restrict negative gearing to new builds only from 1 January next year was an unpopular policy with property investors. Further, its plans to overhaul the franking credits system by scrapping cash refunds on excess dividend imputation credits attracted waves of dissatisfaction from Australian investors, particularly retirees.