The tax office has moved to avert an administrative nightmare for tax payerswho have already lodged their tax returns and risked missing out on the newtax offsets.
The ATO released a statement on Friday saying it was implementing systemchanges so taxpayers who have already lodged their 2018/19 return will receiveany increase to the low and middle income tax offset they are entitled to. Anytax refund will be deposited in the taxpayer’s nominated bank account.
The ATO says refunds for returns already lodged are expected to start goingout towards the end of the week.
“Those who are yet to lodge their return will have any offset they areentitled to taken into account during the normal processing of their return,”the ATO says.
Treasurer Josh Frydenberg says: “The tax office will update their records andsend them the cheque. And for those who are going to put in their tax return,I would encourage them to do that as early as possible because over 10 millionAustralians will receive up to $1,080 and that will be of great use to themand will also be of great help to the Australian economy.”
The Morrison Government passed its $154 billion tax cut package through theSenate late last week, which will provide relief to millions of low andmiddle-income Australians.
There will be immediate tax cuts for low and middle-income earners with thelow to middle income tax offset (LMITO) of up to $1080 for single earners andup to $2160 for dual income families for Australians earning between $48,000and $90,000 for the next four years.
The value of the LMITO increases at a rate of 7.5 cents per dollar for taxableincomes between $37,000 and $48,000, to the maximum offset of $1,080.
The LMITO will provide a tax reduction of up to $255 for people with incomesless than $37,000 and for those earning between $90,000 to $126,000, theoffset will phase out at a rate of 3 cents per dollar.
Tax partner at HLB Mann Judd Sydney Peter Bembrick, says: “It’s a welltargeted approach with tax offset relief to the lower ends and there is quitea bit of relief for middle income earners as well.”
In other parts of the tax package, from 2022/23 the Government will increasethe top threshold of the 19 per cent tax bracket from $41,000 to $45,000 andthe low-income tax offset will extend to $700 from $645.
The bill implements further changes in the coming years. From 1 July 2024, thetax bracket will expand to include those earning between $45,000 and $200,000with a drop of 2.5 per cent in the marginal tax rate to 30 per cent.
The change to the top threshold will prevent around 590,000 taxpayers fromentering a higher tax bracket.
From 2024 the 37 per cent tax bracket will be abolished and the top marginalrate of 45 per cent will apply to taxable incomes above $200,000.
The budget papers show that by 2024/25 around 60 per cent of all personalincome tax will be paid by the highest earning 20 per cent of taxpayers.
“There is an immediate impact but there will be a delayed economic impact. Wehear a lot of negative stories about the economy and the housing market, so wewonder what consumer confidence is like and we will have to wait and see howmuch of a difference this will make,” Bembrick says.
The current Medicare Levy Surcharge for 2018/19 is an additional tax between 1and 1.5 per cent. The Government announced a slight increase in the incomethreshold bracket for the levy.
Singles can now earn $22,389 which is up from $21,980 and the threshold forfamilies is $37,794 from $37,089. The family threshold for seniors andpensioners will be increased to $49,304 from $48,385. For each dependent childor student, the family income thresholds increase by a further $3,471 which isa $65 increase.
Source: The Rub
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