In its 2020 Budget, the Government announced a number of tax measures as part of its COVID-19 Economic Recovery Plan for Australia. The tax relief package is designed “to create jobs, rebuild our economy and secure Australia’s future”.
The Government was able to secure passage of legislation for some of the important measures quite quickly. Those relating to individual tax relief are summarised below.
If you are an employee, these measures will already be reflected in your payslips.
Employers should have already adjusted tax tables in their software, and made the appropriate amendments to tax withheld for most employees.
Please contact us if you need assistance or clarification with what the tax relief measures mean for you or your business.
Tax Relief for Individuals
This package brings forward Stage 2 of the Government’s Personal Income Tax Plan by two years. The changes apply from 1 July 2020 (2021 tax year) and include the following:
- The low income tax offset is increased from $445 to $700;
- An additional one-off benefit of up to $1,080 for low and middle income earners;
- Some marginal tax rate thresholds have increased:
- 19% tax bracket increased from $37,000 to $45,000, and
- 32.5% tax bracket increased from $90,000 to $120,000.
NEW Income Tax Brackets – Residents
| Taxable Income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 + 32.5 cents for each $1 above $45,000 |
| $120,001 – $180,000 | $29,467 + 37 cents for each $1 above $120,000 |
| $180,001 and above | $51,667 + 45 cents for each $1 above $180,000 |
Where applicable, the Medicare Levy of 2% applies in addition to these rates.
NEW Income Tax Brackets – Foreign residents
| Taxable Income | Tax on this income |
|---|---|
| $0 – $120,000 | 32.5 cents for each $1 |
| $120,001 – $180,000 | $39,000 + 37 cents for each $1 above $120,000 |
| $180,001 and above | $61,200 + 45 cents for each $1 above $180,000 |
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances
