The Government’s complete package of individual tax adjustments that were announced in the 2019-20 Federal Budget, have passed parliament and are now law.
On 4 July 2019, the Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Bill 2019 passed all stages of parliament without amendment. This was shortly followed by the Royal Assent on 5 July 2019. This passed into law all three stages of the personal tax changes.
The first stage is to increase the low and middle income tax offset (LMITO) and this comes into operation immediately. From 2018-19 to 2021- 22, the non-refundable LMITO will increase from a maximum amount of $530 to $1,080 per annum. The minimum amount will increase from $200 to $255. This will be received by taxpayers as a lump sum payment after the lodgement of their income tax return, with the first effect being for the year ended 30 June 2019. The LMITO is temporary and will expire in the 2021-22 financial year.
The second stage is to increase the low-income tax offset (LITO). From 1 July 2022 when the LMITO ends, the Government will increase the LITO from $645 to $700. Taxpayers earning up to $37,000 will be entitled to the maximum LITO of $700.
The third stage are changes to the personal income tax thresholds. From 1 July 2022, the top threshold of the 19% personal income tax bracket will increase from $41,000 to $45,000. This was increased last year from $37,000 to $41,000. From 1 July 2024, the marginal tax rate will be reduced from 32.5% to 30%. This will change in order to more closely align the middle tax bracket of the personal income tax system with corporate tax rates.