The Government has officially passed the tax cuts, proposed in the May Federal Budget, through Parliament just weeks away from the end of financial year.
Treasurer Josh Frydneberg said it was “great news for more than 10 million Australians” who will receive a tax offset of $1,080 for individuals and $2,160 for couples.
Tax cuts and concessions were a massive focus in this year’s Budget with Frydenberg zeroing in on growth and jobs to rebuild the economy in response to the COVID-induced lockdowns.
The tax concession is an extension of the low to middle income tax offset (LMITO), which was scheduled to come to an end this year.
More from Federal Budget 2021:
Is this really a tax cut?
Not everyone agrees the extension of the LMITO should be considered a “tax cut”, with H&R Block director of tax communications Mark Chapman arguing the label is deceptive to Aussies.
“Let’s call this what it is and ignore the government spin; this isn’t a tax cut, it's simply the deferral of a tax rise,” Chapman said.
“The LMITO already exists and has done for many years, so extending it for one year (rather than allowing it to fall away, as was the government’s original intention) should not be seen as a tax cut.”
How much will I get?
The amount of the LMITO is $255 for taxpayers with a taxable income of $37,000 or less. Between $37,000 and $48,000, the value of LMITO increases at a rate of 7.5 cents per dollar to the maximum amount of $1,080.
If you earn $48,001 to $90,000, you'll get the full $1,080.
But it starts tapering down if you earn between $90,001 to $126,000: these Aussies get $1,080 minus 3 cents for every dollar of the amount above $90,000.
“Nobody should be counting the extra dollars in next year’s pay packets because there aren’t any; the tax burden for low and middle income individuals next year is exactly the same as it was this year.
“So, a cautious welcome but let’s not sell it as a tax cut,” he said.