The Federal Budget contains income tax cuts for most Australians, with someone on the average wage set to receive an extra $20 or so each week as soon as the cuts are passed.
With wallets hurting right now, the Government wants to see benefits begin to flow as quickly as possible.
With laws from the Budget already before the Parliament, the Government is hoping the cuts can be fast-tracked, meaning your employer could start skimming less tax off of your pay within weeks.
Treasurer Josh Frydenberg says that, with the in-principle support of Labor, the Australian Tax Office (ATO) can begin changing the Pay As You Go rates that determine how much tax your employer withholds each time you get paid.
The changes announced last night amount to about $20 per week extra for a worker earning between $48,000 and $90,000, with people earning more than that getting a larger benefit, up to a maximum of $2,430 per year.
« The ATO have told us that they can update their PAYG withholding schedules as soon as mid- this month, » Mr Frydenberg said.
« They can do so when they have a sense that this measure and our other tax measures … are being supported across the Parliament.
Mr Frydenberg said he expected the changes to be putting money in people’s pockets by Christmas.
The tax cuts are backdated to July of this year, but you won’t get to access the benefits you would have felt between July and now until the end of the 2020-21 financial year.
« That will be dealt with at the end of the financial year as a lump sum payment, » Mr Frydenberg said.
Shadow Treasurer Jim Chalmers said he had written to Tax Commissioner Chris Jordan, assuring him the laws will be passed.
« There is no reason for the Tax Commissioner not to immediately implement the new scales which are agreed between the two big parties in the Parliament, » he said.
A spokesperson from the ATO said tax officials would publish updated tax withholding tables as soon as possible.
« Employers may need a short time to make the changes in their payroll processes and systems in order for the tax cuts to be reflected in people’s take home pay, » they said.
People earning between $37,000 and $126,000 will also get a one-off bonus when they file their tax return next year, because the Government will keep an extended low and middle income tax offset (LMITO) for one more year.
The LMITO is worth $1,080 for people earning between $48,000 and $90,000 (the same amount they would benefit under stage two of the tax cuts), tapering off outside that range.
It was designed to bring forward the benefits of stage two for low and middle income earners.
But it will only be available for the 2020-21 financial year, meaning people receiving it will pay more tax next year than they will this year.
It also comes with the catch that you can’t receive it until you file your tax return at the end of the financial year.
« The low and middle income tax offset is at the end of the financial year and that’s because it’s off your tax paid over the course of that year. So that is a structural reason for that, » Mr Frydenberg said.
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Actu monde – AU – The tax cuts are backdated to July — but you won’t get some of the money till mid-next year