The biggest winners in this years’ federal budget are the middle and lower income earning citizens. New Tax Cuts and Offsets provide reductions in the effective tax rate via a new tax offset. It also aims to remove the 37% tax bracket over a seven year period. The amendments to the tax rates will culminate in the removal of the 37% tax bracket by 2025.
Low and Middle Income Tax Offset
This budget has introduced a new Tax Offset titled The Low and Middle Income Tax Offset. LAMITO will apply on top of the existing Low Income Tax Offset of $445 which applies to incomes between $18,200 and $37,000. It then decreases and is not available once income reaches $66,667.
For those with income less than $37,000, the LAMITO applies an additional benefit of $200. From $37001 it increases by 3 cents per dollar for incomes between $37,001 and $48,000 up to a maximum benefit of $530. This is maintained for incomes up to $90,000 and is not available once income reaches $125,333.
Medicare Levy Increase Removed
The Medicare Levy Threshold will increase for singles to $21,980 and for couples to $37,089, however, the previously announced increase from 2.0% – 2.5% will not happen.
No CGT Discount Assignment of Partnership Interests
You will no longer be able to access the small business CGT concessions for the assignment of partnership interests if you are in a partnership.