Highlights
- Taxpayers emerge winners in Budget 2020
- 19% tax bracket rises to $45,000; 32.5% bracket rises from $90,000 to $120,000
- More than 11 million taxpayers will get a tax cut backdated to 1 July this year
Australians will have more money in their pockets after Treasurer Josh Frydenberg in Tuesday night’s budget announced instant tax relief.
The tax cuts which were scheduled to come into force in 2022 have been brought forward to help Australians emerge from COVID-driven recession.
More than 11 million taxpayers will get a tax cut backdated to 1 July this year, the Treasurer announced in his budget speech.
"Australians will have more of their own money to spend on what matters to them, generating billions of dollars of economic activity and creating 50,000 new jobs," Mr Frydenberg said.
"Lower- and middle-income earners will this year receive tax relief of up to $2,745 for singles, and up to $5,490 for dual-income families compared with 2017-18.
"We will achieve this by bringing forward Stage Two of our legislated tax cuts by two years, lifting the 19 per cent threshold from $37,000 to $45,000, and lifting the 32.5 per cent threshold from $90,000 to $120,000.
"We will also retain the Low and Middle Income Tax Offset for an additional year.
"As a proportion of tax payable compared to 2017-18, the greatest benefits will flow to those on lower incomes – with those earning $40,000 paying 21 per cent less tax, and those on $80,000 paying around 11 per cent less tax this year.
"Under our changes, more than 7 million Australians receive tax relief of $2,000 or more this year," Mr Frydenberg said.
Prime Minister Scott Morrison's final run through of this year’s Budget with Treasurer Josh Frydenberg Source: Twitter/ Scott Morrison
What does this tax cut mean for you?
The introduction of new tax slabs means the top threshold of the 19% tax bracket will rise to $45,000 and the top threshold of the 32.5% bracket will rise from $90,000 to $120,000.
As soon as the fast-tracked tax cuts are passed by the parliament, the ATO will be advised to start working on the rollout and the tax relief should reach taxpayers by December.
Find out how much tax you will save?
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'Budget will be welcomed by most in the Indian community'
Vinod Mishra, Associate Professor of Economics at Monash Business School at Monash University says the government’s announcement of tax relief will be welcomed by most Indians living in Australia.
'Most of them [Indian migrants] are employed in skilled jobs and this announcement will be welcomed. Tax relief is like an injection which has an immediate impact. The government hopes extra cash will boost people's willingness to spend and that will kickstart the economy," Mr Mishra told SBS Hindi.
"It will definitely help. Extra cash is always welcome but we also need to be mindful that many Indians are future-focused. With so much uncertainty about the future, we do not know which families will choose to spend and who will choose to save that extra amount," he said.
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Disclaimer: We’d like to point out that the information contained in this segment is general and is not specific advice. If you would like accurate information relevant to your situation, you should consult a registered financial planner.
