Around 1.2 million Australians have lodged their tax returns as Covid-19 refunds and income tax cuts promise many taxpayers a juicy return.
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In addition to working from home claims, and larger returns due to lower income, around 4.3 million taxpayers will receive the full $1,080 tax offset first introduced in 2019, leading to a record number of Australians lodging.
Remind me – what’s the $1,080 tax offset?
The Coalition government introduced the tax offset as part of its sweeping income tax changes. Around 10 million Australians will receive some form of the offset, which scales up to $1,080.
The offset doesn’t mean Australians receive an extra $1,080 on their tax return, but that their taxable income is reduced by up to that amount.
“As part of last year’s budget we increased the low and middle income tax offset to $1,080 for individuals and $2,160 for couples,” Treasurer Josh Frydenberg said on Monday.
“It means people can keep more of what they earn providing a much-needed boost to the household budgets.”
Australians earning up to $37,000 will receive an offset of up to $255.
The next bracket includes Australians earning up to $90,000. This group will receive an offset of up to $1,080. Australians earning between $48,000 and $90,000 should receive the full offset.
And for those earning up to $126,000, they will receive an offset of $1,080 but the rebate will taper 3 cents for every dollar they are earning above $90,000.
“This is money that will come to people at a very difficult time,” Frydenberg said.
Last year, Australians used the offset to boost their financial situation, rather than spending it.
Research from HR Block found 31 per cent of Australians used it to cover bills like electricity and plumbing. The same amount of people put the money straight into the bank, while 20 per cent paid off debts like car loans or their mortgage.
HR Block communications director Mark Chapman told Yahoo Finance the average tax return will likely increase by “hundreds of dollars” this year as Covid-19 and tax offsets take a bite out of Australians’ taxable incomes.
The government has also confirmed it is considering pulling the next two stages of income tax cuts forward.