Personal tax relief for low and middle-income earners

If you earn less than $90,000, you can expect some tax relief in the form of a new low and middle income tax offset and changes to personal income tax brackets.

 

What are your savings per year?

If you earn…  

Your savings per year

 

 

$37,000 or less

 

Up to $200

 

$37,001 – $47,999

 

Between $200 – $530

 

$48,000 – $90,000

 

Up to $530

 

$90,001 – $125,333

 

 

Up to $530, gradually reducing to $0

 

 


Changes to personal tax brackets

  • From 1 July 2018, the top threshold of the 32.5% tax bracket will be increased from $87,000 to $90,000.
  • When the low and middle-income tax offset concludes in 2021-22, the benefits will be locked in by increasing the top threshold of the 19% tax bracket from $37,000 to $41,000 and increasing the low income tax offset from $445 to $645 from 1 July 2022.
  • From 1 July 2022, the top threshold of the 32.5% tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year.

How does this impact small and medium sized businesses?

The immediate relief for low and middle-income earners will be a significant benefit to the nearly 40% of small businesses that are unincorporated.

There will be some tax changes for your employees, so now is the time to review your payroll software, PAYG withholding tax and business processes.

 

Note!
Single Touch Payroll is coming on 1 July 2018!  If your business has 20 or more employees, you’ll need to report payments such as salaries and wages, withholding and super information to the ATO directly from your payroll solution at the same time you pay your employees.

Speak to Burns Sieber to find out how you can be compliant.