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Massive tax cuts worth up to $2565 a year are coming EARLY amid coronavirus pandemic

Massive tax cuts worth up to $2,565 a year are coming EARLY amid coronavirus pandemic – so how much will you be getting?

  • Tax cuts of up to $2,565 a year earmarked for 2022 are being brought forward
  • Treasurer Josh Frydenberg told ABC the government was ‘looking at the issue’
  • The 32.5 per cent tax bracket was due to move from $90,000 to $120,000 

Generous tax cuts worth up to $2,565 a year are expected to be brought forward to help Australia recover from the coronavirus recession.

Tax relief earmarked for July 2022 is likely to be activated this year, with higher-income earners set for a bigger treat.

Treasurer Josh Frydenberg has revealed Australian taxpayers were likely to see this relief in coming months.

‘We are looking at that issue and the timing of those tax cuts, because we do want to boost aggregate demand, boost consumption, put more money in people’s pockets, and that is one way to do it,’ he told ABC Radio’s AM program.  

Treasurer Josh Frydenberg has revealed Australian taxpayers were likely to see this relief in coming months.

Those earning $120,000 or more were allocated $2,565 worth of annual tax cuts in the 2019-20 budget, which weren’t due to be rolled out until July 2022.

That was when the 32.5 per cent personal income tax bracket was to be moved from $90,000 to $120,000.

TAX CUTS AT A GLANCE

Tax cuts of $255 for those earning between $18,200 and $37,000 were legislated in July 2019.

Those earning $48,000 to $90,000 saw their tax cuts double from $530 to $1,080.

The government’s tax cuts package, announced in the April Budget, had three stages.

Stage one increased the threshold for the 32.5 per cent personal income tax bracket from $87,000 to $90,000, over four years until 2022.

Stage two, from July 1, 2022, would increase the 19 per cent personal income tax bracket from $41,000 to $45,000. It also raises the 32.5 per cent personal income tax bracket from $90,000 to $120,000. 

Stage three, if the Coalition had its way, would see the 37 per cent tax bracket abolished from July 1, 2024 and a new 30 per cent tax bracket created for all individuals earning between $45,001 and $200,000. The number of tax brackets would be slashed from five to four for the first time since 1984

The top threshold for the 19 per cent tax bracket was also due to be increased from $41,000 to $45,000 as the low-income tax offset was raised from $645 to $700.

In his first budget as Treasurer, Mr Frydenberg last year announced those earning $45,000 to $120,000 fitting within a 32.5 per cent tax bracket. 

‘Well, as you know, there were three stages to those legislated income tax cuts, and the benefit was very clear,’ he said.

‘We’re creating one big tax bracket between $45,000 and $200,000, where people pay a marginal rate of no more than 30 cents in the dollar.’ 

Westpac calculated the early tax cuts would cost the government $15billion.

The bank’s chief economist Bill Evans is now forecasting a budget deficit for 2020-21 of $240billion, which would see net debt as a proportion of the economy climb from 19 per cent a year ago to 37 per cent now. 

The six-week shutdown in Melbourne was expected to cause Australia’s economic contraction for 2020 to worsen, from a four per cent drop to a 4.2 per cent decline. 

Mr Frydenberg, who lives in Melbourne, confirmed last month Australia’s economy was most likely already in recession – a situation that hasn’t occurred since 1991. 

In November last year – two months before COVID-19 came to Australia – the Treasurer hinted tax cut planned for 2022 could be brought forward to 2020.  

‘Now I’m obviously conscious that there is a staged approach to our tax cuts that we legislated, but we are focused on delivering a stronger economy and we’re always looking for opportunities to reduce tax,’ he told Sky News Australia on Thursday.

They were the second part of three stages of planned tax relief announced in the  April 2019 budget, a month before the federal election.

The COVID-19 pandemic has delayed the budget by five months until October.  

Last year, as bushfires dominated the headlines, Australia’s economic growth had slowed to the slowest level since the Global Financial Crisis.

H&R Block’s director of tax communications Mark Chapman in November that situation justified bringing forward by two years the next round of planned tax cuts.

‘Yes. Given the fragile state of the economy and the repeated hints from the RBA that more action is required to boost growth, it would certainly make sense to move the stage two tax cuts from 2022 to 2020,’ he told Daily Mail Australia.

Read more at DailyMail.co.uk


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