TAX CUT FOR ALL PEOPLE IN AUSTRALIA

Pressured by expensive living costs, the Australian Government has decided to introduce tax cuts in Australia for 13.6 million taxpayers from July 1, 2024.

1. Overview of Australian tax cuts in Australia

The Australian Government has introduced changes to personal income tax rates and thresholds.

From July 1, 2024:

• Tax rate 19% reduced to 16%
• Tax rate 32.5% reduced to 30%
• 37% tax threshold, increased from AUD 120,000 to AUD 135,000
• The starting tax threshold is 45%, increased from AUD 180,000 to AUD 190,000.

These changes apply to Australian taxpayers.

2. Details of the tax cut plan in Australia

2.1 What is tax reduction?

Tax reduction, also known as tax incentives, is a change in tax rates and taxable income thresholds. This is a method to reduce the taxpayer’s tax liability. 

This concept is the opposite of a tax refund. Tax refund is the amount of money received back from the Australian Taxation Office (ATO), if the taxpayer overpays when completing the tax payment obligation. 

2.2 When will tax reduction be available?

New tax rates and taxable income thresholds apply from July 1, 2024.

For most taxpayers, any income from salaries and wages of employees working at the enterprise will be exempted or reduced from monthly tax on the day the salary is received. 

Others will receive tax reductions after the end of the tax declaration period in 2024-2025. 

However, this decision is applied this year so it does not affect the tax payment obligation made in 2023-2024. 

2.3 How to receive tax cuts?

If you are an employee, the employer, after updating the employee’s withholding tax amount (PAYG), then pays the remaining salary periodically every month. 

Check your pay stub or ask your employer if you received the new tax break. 

Employers need to use the new tax rates and tax tables from 1 July 2024.

3. New personal tax thresholds and rates for 2024-2025

This table compares the personal income tax rates and thresholds for 2023-2024 with the new tax rates and thresholds for 2024-2025.

4. How do tax rates in Australia work?

If you are an Australian taxpayer, you are exempt from tax if your taxable income is below $18,200. This means you can get 100% tax exemption if your yearly income is less than A$18,200. 

If income is between $18,201 and $45,000:

• The first $18,200 is tax-free 
• And, you’ll pay 16% on the remaining $18,201 to $45,000.

If income is between $45,001 and $135,000:

• The first $18,200 is tax-free
• 16% is calculated for the portion from $18,201 to $45,000
• Add 30% to remaining income calculated from $45,001 to $135,000. 

If income is between $135,001 and $190,000:

• The first $18,200 is tax-free
• 16% is calculated for the portion from $18,201 to $45,000
• Add 30% to income calculated from $45,001 to $135,000
• And, 37% for income calculated from $135,001 to $190,000. 

If income is over $190,000:

• The first $18,200 is tax-free
• 16% is calculated for the portion from $18,201 to $45,000
• Add 30% to income calculated from $45,001 to $135,000
• 37% for income calculated from $135,001 to $190,000
• Finally, 45% for the portion above the $190,000 threshold.

Low-income taxpayers and the elderly may qualify for direct tax breaks. 

For more information please contact the My Australian Property team now!

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