Following intense media speculation and despite promises even up until last week that there would be no changes to the legislated ‘Stage 3 tax cuts’, the Australian Prime Minister, Mr Anthony Albanese has now announced a proposal to change his Government’s tax policy.
The change in policy is motivated by changing economic circumstances and follows Treasury advice that the legislated cuts no longer make sense in a high-inflation environment.
The Government is proposing changing the already legislated tax cuts which were to commence on 1 July 2024, so that all taxpayers benefit.
The ‘Robin Hood’ proposals take from the rich and give to more Australians.
Rather than high income earners on more than $200,000 receiving $9,075 of tax benefit, this will be reduced to a maximum benefit of $4,529 for those taxpayers. The Government advises most taxpayers should now receive relief of $804.
The Prime Minister advised these new tax cuts are not expected to add inflationary pressures.
The proposed changes include:
Lowering the first tax rate on incomes between $18,200 and $45,000 from 19% to 16%
Changing the $45,001 - $200,000 30% tax band to stop at $135,000
Reintroducing (continuing) the 37% band from $135,001 to $190,000
45% tax rate above $190,000 (legislated $200,000)
Increase in the Medicare Levy threshold to $26,000
The new policy is expected to be introduced to Parliament in the coming weeks and to apply from 1 July 2024.
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Author: Jamie Towers
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