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26 April 2019

Budget 2019 - Individuals

Budget Changes for Personal Income Tax 

Personal tax rates

While tax rates for individuals will remain the same as those set by the government in last year’s budget until 30 June 2022, the proposed income threshold change to the 19% tax bracket will be increased from $41,000 to $45,000 from 1 July 2022.

From the 2025 financial year, the government is proposing a reduction to the 32.5% tax bracket to 30%. This is in addition to changes already legislated for 2025 FY from last year’s budget, to increase the upper threshold of the 32.5% tax bracket from $120,000 to $200,000 and abolish the 37% tax bracket.

The following table reflects the proposed personal tax rates and threshold changes over the next few years. Please note this excludes the Medicare levy of 2% which is added on top of each tax rate.

Rate

Current year

2018-19 to 2021-22

Proposed

2022-23 to 2023-24

0%

$0 - $18,200

$0 - $18,200

19%

$18,201 - $37,000

$18,201 - $45,000

32.5%

$37,001 - $90,000

$45,001 - $120,000

37%

$90,001 - $180,000

$120,001 - $180,000

45%

$180,000 +

$180,000 +

 

Low and Middle Income Tax Offset 

The Low and Middle Income tax offset (LMITO) was introduced in the 2018 budget to start from 2019 to provide tax relief for low and middle income earners. The government has proposed an increase to the offset amount.

The increased LMITO will be available for the 2019 financial year up to and including the 2022 financial year, and will be received on assessment after individuals lodge their annual tax returns. This is a non-refundable offset, which means it can only reduce the amount of tax payable, it is not a flat amount refunded to tax payers.

Here is a comparison of the proposed changes to the LMITO:

 

LMITO (From the 2018 Budget)

LMITO (Proposed in 2019 Budget)

Income brackets

LMITO amount

Income brackets

LMITO amount

$0 - $37,000

Up to $200

$0 - $37,000

Up to $255

$37,001 - $48,000

$200 + 3% of excess over $37,000

$37,001 - $48,000

$255 + 7.5% of excess over $37,000

$48,001 - $90,000

$530

$48,001 - $90,000

$1,080

$90,001 - $125,333

$530 less 1.5% of excess over $90,000

$90,001 - $126,000

$1,080 less 3% of excess over $90,000

$125,334 +

Nil

$126,001 =

Nil

 

The benefit of the Low and Middle Income Tax Offset is in addition to the existing Low Income Tax Offset (LITO). So, some tax payers may be eligible for both the LITO and LMITO. Currently the Low Income Tax offset is a maximum of $445 and again this is a non-refundable offset. 

From 1 July 2022 the LMITO and LITO will be replaced by a single Low Income Tax Offset. In the 2019 budget the government announced an increase to the maximum amount of this offset to $700. It will be applicable for those earning between $37,500 and $66,667 on a sliding scale.

Medicare levy for Low-Income Households

The threshold for where Medicare Levy is payable in low-income households will increase. This increase will apply for individuals & families as well as for seniors & pensioners.

The threshold increases are as follows:

  • Threshold for singles will be increased from $21,980 to $22,398
  • Family threshold will be increased from $37,089 to $37,794
  • Threshold for single seniors and pensioners will be increased from $34,758 to $35,418
  • Family threshold for seniors and pensioners will be increased from $48,385 to $49,304
  • For each dependent child or student, the family threshold increases by a further $3,471, up from the previous amount of $3,406

 

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.  

 

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