If re-elected the Liberal party have promised to simplify the current tax levels imposed on individual tax payers. They have also proposed to increase the eligibility for the low-income tax offset. The changes to the low-income tax offset would see taxpayers who earn up to $37,000 receive a $530 tax offset. This would increase to $1,080 for people earning income between $48,000 and $90,000, before reducing to nil for taxpayers earning $126,000 or more per year. These changes start from the current 2019 financial year.
The Liberals also propose to ‘flatten’ out the current tax levels over the next 5 year period.
This will be done in the following stages:
- From 1 July 2018, the current 32.5% tax bracket threshold will increase from $87,000 to $90,000. Expected tax saving is $135 for any individual earning over $90,000 per year
- Starting from 2021-22, the current 19% tax bracket will be lifted from $37,000 to $41,000. The tax saving per individual from this measure is expected to be $540 per year for anyone earning over $41,000
- From 1 July 2022, the 32.5% tax bracket threshold will be lifted from $90,000 to $120,000. Expected tax saving is $1,350 per year for taxpayers earning over $120,000
- Starting from 2022-23, the 19% tax bracket will be lifted from $41,000 to $45,000. The tax saving per individual from this measure is expected to be $540 per year for anyone earning over $45,000
- From 1 July 2024, the 32.5% tax bracket threshold will increase from $120,000 to $200,000. This will remove the 37% tax bracket completely. Expected tax savings per individual will be $3,600 per year
Whilst the above tax cuts tend to favour higher income earners, the low income offset in conjunction with the tax cuts to the 19% tax bracket will also assist lower income earners…according to the Liberal party website.