Personal Income Tax changes

Personal Income Tax changes

As announced in the Budget, the Government has brought forward changes to the personal income tax rates that were due to apply from 1 July 2022 – they will now apply from 1 July 2020 (i.e. the 2021 income year).

THE CHANGES ARE:

  • Increasing the upper threshold of the 19% personal income tax bracket for $37,000 to $45,000
  • Increasing the upper threshold of the 32.5% personal income tax bracket from $90,000 to $120,000.

These changes will be applied to salary and wages from November 2020 to June 30, 2021. Unpaid cuts from 1 July 2020 to November 2020 will be refunded in the taxpayers 2021 tax return when it is lodged.

Changes to the Low-Income Tax Offset (LITO) will also be brought forward from 1 July 2022 and will apply from 1 July 2020 as follows:

  • The maximum LITO will be increased from $445 to $700.
  • The new maximum will be reduced at a rate of 5 cents per dollar for taxable incomes between $37,000 and $45,000
  • The LITO will be reduced at a rate of 1.5 cents per dollar for taxable incomes between $45,000 and $66,667.

The Government has also announced that the current Low and Middle Income Tax Offset (LAMITO) will continue to apply for the 2021 tax year. Thus, the maximum of $1,080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000 in the 2021 income year.

In addition – pensioners, veterans, concession card holders and some other social security recipients will receive a $500 cash payment in two instalments – $250 in December 2020 and $250 in March 2021.