Following the Federal Budget announcement, the federal government has proposed a Low and Middle Income Tax Offset (LMTO). This new non-refundable offset is available to Australian resident taxpayers and could convert to a benefit of up to $530 annually, available for the 2018-22 income years. It will be received as a lump sum on assessment when an individual lodges an income tax return.
Taxable incomes and the applicable savings included are:
- Taxable incomes of $37,000 or less will benefit up to $200
- Taxable incomes between $37,000 – $48,000 will see the value of the offset increase at a rate of three cents per dollar to the maximum benefit of $530
- Taxable incomes between $48,000 – $90,000 will get the maximum benefit of $530
- Taxable incomes between $90,001 – $125,333 see the offset phase out at a rate of 1.5 cents per dollar
The LMTO are in addition to the low income tax offset and other non-refundable offsets currently available.
From 1 July 2018, the Government will provide a tax cut of up to $135 per year by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000. The Government also intends to remove the 37 per cent tax bracket by 2024, meaning a flat rate of 32.5 per cent for everyone earning between $41,000 and $200,000.
These plans still need the support of the Senate to become law. The Labor government have indicated they will support tax cuts to low and middle income earners.
These changes could have a big impact on you and your business. Get in touch with our team to gain a solid understanding and plan ahead. Contact BLG Business Advisers on (02) 4229 2211 or online to arrange an appointment today.