- Low- and middle-income tax offset remains for 2021 financial year
- All eyes now on the progress of the legislation and the ATO’s response
- Need to revisit PAYG withholding and individual PAYG instalments
The ‘stage 2’ personal tax cuts legislated to commence on 1 July 2022 will now apply from 1 July 2020, subject to the passing of the Budget.
The top threshold of the 19% bracket increases to $45,000 from $37,000 and the top threshold of the 32.5% bracket will increase to $120,000 from $90,000. A low-income tax offset (maximum $700) has also been brought forward, and the low- and middle-income tax offset (maximum $1080) has been retained for 2020-21.
All eyes now will be on Parliament to see how quickly the legislation can be passed.
Once that’s done, the focus will switch to the Australian Taxation Office and its ability to quickly re-calibrate PAYG withholding and instalment notices and advise employers and payroll software companies.