“A stronger economy. More jobs. Guaranteeing essential services. The Government living within its means. That is what this Budget is about,” said Scott Morrison on Tuesday, May 8 when handing down the 2018-19 Federal Budget.
The Budget certainly has everyone talking, because it promises to cut tax incrementally and give money back to low and middle income earners.
Here are some of the benefits of the latest tax cuts as proposed by the government:
- Reductions in the amount of tax you’ll pay
As of next July, Australians who earn up to $37,000 will receive a cut in their tax bill by $200, and this offset increases incrementally for those who earn between $37,000 and $48,000. A $530 offset will be applied to people earning between $48,000 and $90,000 and will reduce to zero at the taxable income of $125,000. Having that extra $10 might sound like a small amount, but it may make a difference for the four million taxpayers in these circumstances.
- Change in tax brackets
Those earning between $87,000 and $90,000 per annum will fall back into the lower tax bracket of 32.5% tax, not the current 37%. This is expected to affect around 210,000 Australians in this tax bracket
The Government tips the overall economy will benefit from these tax cuts with changes to jobs and spending.
- Decline in unemployment
According to Deputy Central Bank Governor Guy Debell, there should be a gradual reduction in the jobless rate. “The unemployment rate has declined 0.25 percentage points over the past year – we are expecting something similar over the year ahead,” he said post-Budget. With economic growth set to pick up, it’s believed that the hiring intention from business owners will remain positive and job opportunities will continue to increase.
- Growth in spending
Consumers with more money in their pockets are likely to spend that extra income, flowing on to business both small and large. Typically if we receive a tax return, we’re inclined to spend our refund.
For more information about these tax changes or if you need help with your tax, contact us today and we’ll be glad to help you.
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