Tax cuts for 11 million Australians will flow in the coming weeks after the Morrison Government secured the passage of the legislation through the Federal Parliament today.
The tax relief package, for both individuals and business, is part of our COVID-19 Economic Recovery Plan for Australia to create jobs, rebuild our economy and secure Australia’s future.
The Australian Taxation Office (ATO) will update its schedules next week, with software payroll companies to update over the coming weeks, to get more money into the pockets of hard-working Australians as quickly as possible.
Getting money into the pockets of Australians will give them more to spend at their local shops helping to create more jobs.
Our business tax relief measures will also help to keep businesses to stay afloat, to grow and to hire more people.
It is estimated our tax relief package to reduce the personal income tax burden and encourage business investment will create around 100,000 jobs by the end of 2021-22 and boost GDP by around $6 billion in 2020‑21 and $19 billion in 2021-22.
Tax relief for individuals
The package brings forward Stage two of our Personal Income Tax Plan by two years. From 1 July 2020:
- the low income tax offset will increase from $445 to $700;
- the top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000; and
- the top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000.
The Government is also providing additional targeted support to low-and middle-income Australians.
In 2020‑21, low-and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset (LMITO).
Together, bringing forward Stage two and providing the additional LMITO means more than 11 million Australian taxpayers will get a tax cut, with effect from 1 July this year.
Tax relief for business
Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
This will help to rebuild our economy and create more jobs by kick-starting activity in the private sector.
To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid.
This will provide a targeted cash flow boost to help keep businesses in business and Australians in jobs.
Businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions.
This will reduce red tape and support around 20,000 businesses to attract workers and retain jobs.
Under the changes passed by the Parliament the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.
This will help more than 11,400 companies that invest in research and development to create the jobs of today and tomorrow.
Tax relief for hard-working Australians and businesses is part of the Government’s Economic Recovery Plan to create jobs, rebuild the economy and secure Australia’s future.