As you must have already heard, the 2020 budget was all about “JOBS”. A great deal of emphasis was placed on creating new jobs and helping individuals who lost their jobs due to COVID get back into work sooner.
The main buzz in the industry before the budget was even released circled the potential individual tax cuts being bought forward. The Budget 2020 indeed did bring forward the second stage of individual tax cuts by 2 years from 1 July 2022 to 1 July 2020.
Here is a comparison table showing you the new Tax rates and Income thresholds being implemented.
From 1 July, 2020
- the top threshold of the 19% tax bracket will increase to $45,000 from $37000.
- the higher threshold of the 32.5% tax bracket will increase to $120,000 from $90,000.
Apart from the tax rate changes, the Budget has also brought forward the Low Income Tax Offset (maximum of up to $700), while the Low and Middle Income Tax Offset (LMITO) (maximum of up to $1080) will be available for 2020-21 tax season.
These proposed changes are expected to provide 7 million individuals with a tax relief of $2,000 or more for the 2020-21 tax season. Singles and families falling under the Low and Middle Income Tax Brackets are send to receive reliefs of up to $2,745 and $5,490 respectively.
Here is a table that shows the tax relief by taxable income.
Our final thoughts: Expect to receive a big chunk of tax refund next year as the ATO is still working on providing an updated employer tax tables and until they are released, you will effectively be paying more tax than you should. 2021 Tax is going to be all about REFUNDS!