Personal Tax Cuts in a 3 Step Plan to be Implemented Over 7 years

Step 1: Target Relief for Low and Middle Income Earners

The government will introduce the Low and Middle Income Tax Offset (LAMITO) which is a non-refundable tax offset of up to $530 per year made available for the 2019, 2020, 2021 and 2022 income tax years. It will be paid as a lump sum on assessment after lodgement of an individual’s income tax return. This LAMITA is in addition to the current Low Income Tax Offset (LITA) available to taxpayers. The application of the proposed benefit is:

  • Taxpayers with taxable incomes of $37,000 or less will receive a benefit of up to $200.
  • Taxpayers with taxable incomes of $37,000 to $48,000 will receive a benefit of up to $530. Increasing at 3 cents per dollar after $37,000 of taxable income up to the maximum $530.
  • Taxpayers with taxable incomes of $48,000 to $90,000 will receive a benefit of up to $530.
  • Taxpayers with taxable incomes of $90,000 to $125,333 will receive a pro rata benefit phasing out at 1.5 cents per dollar.

Step 2: Protecting Middle Income Australians From Bracket Creep

  • From 1 July 2018, the top threshold of the 32.5% tax bracket will increase from $87,000 to $90,000. Allowing another $3,000 of taxable income to be taxed at 32.5% instead of 37%. These rates do not include medicare levy.
  • From 1 July 2022, the top threshold of the 19% tax bracket will increase from $37,000 to $41,000 and to further increase the top threshold of the 32.5% tax bracket from $90,000 to $120,000.
  • It is also proposed to increase the current Low Income Tax Offset (LITO) from $445 to $645 from 1 July 2022. This LITA will reduce at a rate of 6.5 cents per dollar between taxable incomes of $37,000 to $41,000 and reduce at a rate of 1.5 cents per dollar between taxable incomes of $41,000 to $66,667.

Step 3: Ensuring Australians Pay Less Tax By Making The System Simpler

The Government proposes to remove the 37.5% tax bracket entirely. From 1 July 2024, the government will extend the top threshold of the 32.5% tax bracket from $120,000 to $200,000. The tax bracket of 32.5% will apply to taxable incomes from $41,001 to $200,000 and taxable incomes exceeding $200,000 will be taxed at the top marginal rate of 45%.

Income for a Person’s Fame or Image to Be Taxed Personally

From 1 July 2019, high profile individuals will no longer be able to license their fame or image to a company or a trust to take advantage of lower tax rates. Instead, the income will be required to be disclosed as assessable income to the individual.