Hello Chasers,
Despite previous assurances, and after much speculation, the Government has announced tweaks to the ‘Stage 3’ tax cuts that will apply from 1 July 2024.
The Stage 3 tax cuts have been subject to considerable debate and controversy, with some critics arguing that they disproportionately benefit higher-income earners and may exacerbate income inequality. The revised cuts will return hundreds of dollars more to low and middle-income Australians at the expense of halving the benefits the wealthiest Australians were due to receive.
Whilst proponents of the tax cuts argue that they stimulate economic growth by putting more money into the pockets of consumers, which can lead to increased spending and investment.
The Coalition has agreed at a party room meeting to wave through the federal government’s changes to the stage 3 tax cuts. Opposition Leader Peter Dutton has announced the Coalition will attempt to amend the bill but will not stand in the way if those amendments fail.
The decision means the government will not have to negotiate with the Greens or crossbench to pass the tax cut change through the Senate.
Prime Minister Anthony Albanese last month announced the government would break an election promise and attempt to amend tax cuts legislated by the former government, shifting the gains towards middle-income earners.
The Stage 3 tax cuts take effect from 1 July 2024 and involve: removing the $120,000 to $180,000 tax bracket. increasing the top tax bracket threshold from $180,000 to $200,000.
More particularly, the Government proposes to:
- reduce the 19% tax rate to 16%.
- reduce the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold.
- increase the threshold at which the 37% tax rate applies from $120,000 to $135,000, and
- increase the threshold at which the 45% tax rate applies from $180,000 to $190,000.
The Medicare levy low-income thresholds for the 2024 income year will also be increased.
We are anticipating that the legislation to bring these changes into effect from the 1st of July 2024 will be in place when we are ready to conduct your tax planning meetings in April 2024.
Please contact our office on 03-55612643 if you have any queries.
Have a great day!
GOOD NEWS ALERT – The Federal Government announced last Thursday 22nd of February that from 1 July 2024, the standard concessional contribution cap will increase from $27,500 to $30,000 and the non-concessional contribution cap which is expressed as four times the standard concessional contribution cap will also increase from $110,000 to $120,000.
So those getting tax cuts should consider increasing their super contributions in 2025!
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