The Australian government has launched the Better Tax campaign in order to help inform the public of tax reforms coming into effect. Designed to “better Australia”, here is a look at what this plan means for you.
Individual Tax:
- New low to middle-income tax offset: Offering immediate relief of up to $530 after an individual lodges their tax return for each income year from 2018-19 until 2021-22.
- Increase to income tax rate thresholds: Changing over the next seven years so less tax is paid by Australian taxpayers. The first change took effect on 1 July 2018 with future changes in 2022-23 and 2024-25.
- Reduction in the number of tax brackets: In order to simplify the system, in 2024-25 the tax system will move from five tax brackets to four.
Business Tax:
- Tax cuts for incorporated small and medium businesses, with a turnover of less than $50 million per annum. These companies will move to a 25 per cent tax rate by 2021-22.
- The small business income tax offset; increasing the rate of the tax discount for unincorporated small businesses with a turnover below $5 million
- Increasing the instant asset write-off threshold from $20,000 to $25,000 and extending it until 30 June 2020. The increased threshold will apply from 29 January 2019, with legislation to be introduced.
- Increasing the small business entity turnover threshold from $2 million to $10 million per annum, extending access to a range of tax concessions.
