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.