Who gets a tax cut from 1 July?

1 July 2018 is the start date for the seven year income tax plan announced in the recent 2018-19 Federal Budget. The seven year plan benefits low and middle income earners in the first few years before expanding out to a broader restructure of the tax rates and brackets for everyone.

From 2018-19, the top threshold of the 32.5% personal income tax bracket will increase from $87,000 to $90,000. Dovetailing into the tax bracket change is the introduction of the Low and Middle Income Tax Offset. The offset is a non-refundable tax offset that you receive when you lodge your income tax return.

If your annual taxable income is $80,000 in 2018-19, then the personal income tax changes provide an annual tax reduction of $530 per year. If your annual taxable income is $120,000, then the changes give you an annual reduction of $215.

Such a change will allow you to earn more before facing a higher tax bracket, however, just to ensure that the fact you know it all and be prepared for the change, come and talk to us Tax Ideas Accountants & Advisershttp://taxideas.com.au/booking/   Tel: (02) 8318 1545

 

Posted in Case Studies, Tax Updates.